Professional Documents
Culture Documents
OF INTELLECTUAL
PROPERTY RIGHTS:
A CASE BOOK
3 Edition – 2012
rd
LTC Harms
Table of contents
Preface p. 5
ACKNOWLEDGEMENTS p. 7
CHAPTER 1 INTRODUCTION p. 9
CHAPTER 5 TRADEMARKS:
WELL-KNOWN TRADEMARKS p. 137
2
CHAPTER 15 UNFAIR COMPETITION: PASSING OFF p. 337
“The views expressed in this work are those of the author in his personal capacity and do not necessarily
represent the positions or opinions of the Member States or the Secretariat of the World Intellectual
Property Organization”.
3
4
Preface
3nd Edition
In this context, Member States continuously emphasize the need for improved
access to case law developments relating to IP enforcement. In response to
this demand, the Honorable Justice Harms, former Deputy President of the
Supreme Court of Appeal of South Africa and renowned international expert
in the field, was asked to prepare the WIPO Case Book on the Enforcement
of IP Rights; the first edition focusing on common law jurisdictions, and the
second covering both common and civil-law jurisdictions.
The Case Book proved to be popular and an excellent training tool for the
judiciary, law enforcement officials, attorneys and right holders. Building on
this success, WIPO has requested Mr. Justice Harms to update and further
develop this important publication.
WIPO is grateful to Mr. Justice Harms for preparing this new edition. It is
a compilation of IP enforcement-related case law from a great number of
courts and tribunals, providing an in depth analysis of common and civil-law
jurisprudence, underscoring similarities and, where appropriate, highlighting
differences. It covers the most recent decisions on topical issues in common
and civil-law jurisdictions (including the case-law of the Court of Justice of
the European Union).
I am convinced that this third edition, like the first two editions, will constitute
a relevant tool to further enhance the handling of IP cases in developing
countries and to enhance confidence in the IP system.
Francis Gurry
Director General
World Intellectual Property Organization
5
6
ACKNOWLEDGEMENTS
“Ignorance has many virtues, amongst them the fact that it tends to
produce a feeling of self-confidence which allows one to contemplate
large projects with a sense of complete equanimity.”1
These words are apposite to this third edition of a case book which, in
its first edition, sought to give an overview of the enforcement aspects of
intellectual property law in the common-law and mixed law systems; but the
second and third editions seek to give the reader some insight into civil-law
principles and jurisprudence – in spite of my limited expertise.
In preparing the case book I was again reminded of Sisyphus: he who was
condemned by the gods to push a rock up a mountain, eternally. Whenever
he reaches the top, the rock rolls down again. On each occasion when the
end was supposed to be near another statute or judgment would surface,
some new and some old. And I had and still have the uncomfortable
realization that much of value must have been missed in the process of
trawling with a net with a large gauge through books, law reports and the
Internet. In Paul Theroux’s imagery, preparing a case book on IP enforcement
is like a two-pound chicken trying to lay a three-pound egg. As is the case
with any collection, the choice depends on whatever the selector knows of
or can find with relative ease and is comfortable with, which explains (but
not justifies) the fact that I have sometimes resorted to picking myself up by
my own shoestrings by quoting my own judgments.
The causa causans of this work was the request from the World Intellectual
Property Organization (WIPO) and especially the active support and
encouragement of members of its Building Respect for IP Division, whose
confidence in my abilities must have been sorely tested during the course of
the project. I thank them.
The conditio sine causa is, however, my mentor, the late Dr JR Steyn, who
introduced me to this field of the law in 1967, and tried to keep me on
course for more than 20 years. His memory I wish to honor.
Contributory causae are especially my wife, Irene, who believed that the
book could become a reality and my family, and colleagues and counsel
with whom I have debated many of the issues that are reflected in the notes.
In the preface to the first edition I thanked Mr. Pravin Anand, who provided
me with a summary of the ‘best IP cases’ and other material from India, and
Mr. Robert L Baechtold, who gave me a number of useful US references.
I also expressed my appreciation to those who had read and commented
1 Charles van Onselen New Babylon New Nineveh (preface to the first edition) 2001.
7
on the whole or part of the original manuscript in its different stages:
Professor David Vaver, Advocate L Bowman SC, and the staff members of
WIPO involved.
For this edition I have to add to the list two names who require special
mention. The first is Ms. Anja Petersen of the firm Hoffmann Eitle, Munich,
who provided me with a collection of German case law and assisted me in
understanding some German legal concepts. The second is Mr. Tetsuo Niwa
the former director of the Asia-Pacific Industrial Property Center at the
Japan Institute of Invention and Innovation). The Center has an exceptionally
useful series of case books on Intellectual Property Rights, which were kindly
provided for my use with the consent of the Japan Patent Office.
Louis Harms
Supreme Court of Appeal
South Africa
8
INTRODUCTION
CHAPTER I
I. JURISDICTION (37-41)
9
INTRODUCTION
The work falls into three parts. The first section deals with the infringement
of the most important IP rights; the second with civil remedies; and the final
part, which is self-contained, deals with criminal enforcement, particularly
counterfeiting and piracy and related procedural issues.
2. Readership: The work is intended for those who are involved in the
enforcement of IP rights such as judicial officers in both civil and criminal
courts, lawyers, prosecutors, as well as law enforcement officers and
customs officials.
3. Common law and civil-law: The first edition of this work focused on legal
systems with a common-law background, including those with a mixed civil
and common-law system, and countries that use English as a court language.
The later editions attempt to expand the legal horizon and use judgments
from civil-law jurisdictions as well as those from the European Court of
Justice. However, the droit romain legal tradition is covered by another WIPO
publication, namely that by Marie-Françoise Marais & Thibault Lachacinski
L’application des Droits de Propriété Intellectuelle (2007) and this work does
not purport to overlap with that work.
Since this is a “casebook” (or source book) and has to cover a large number
of jurisdictions, the accessibility of judgments quoted is a major selection
criterion. Consequently, most of the judgments and other material referred
to are of fairly recent origin and can be found on the Internet. Extracts from
older cases are generally those that are commonly quoted and can, therefore,
be traced indirectly.
10
CHAPTER I
The differences between the two systems are, in the present context, firstly
procedural. The common-law judge plays a less active role in the proceedings
than the civil-law judge because in the case of the former the parties drive
the litigation. Judges in common-law countries at first instance (and on
appeal) are seldom specialists in the particular field of litigation and as a
general rule do not sit with experts or use court experts.
The eminent social philosopher, Max Weber, stated the difference in these
terms: he classified the civil approach as logically rational, based on generic
rules (a jurisprudence of concepts) while the common-law method of thought
is based on reasoning by example. This means that civil-law courts tend to
concentrate on identifying principles (German: das Prinzip) while common
law courts tend to be more pragmatic. There is also the emphasis in the civil
systems of the droit moral (IP law has a moral aspect); the civil definition of
a tort or delict is open-ended; and, depending on the court’s understanding
of the commercial morals of society, outcomes may differ from case to case.
The common law lays greater emphasis on the value and binding force of
precedents than does the civil-law and, consequently, judgments in common-law
countries tend to be more wide-ranging than in civil-law countries. As
11
INTRODUCTION
Sir Stephen Sedley (a judge from England) wrote,1 “the prose form of common-
law judgments remains that of the oral judgment, and the oral judgment at base
represents the process of thinking aloud. Civil-law judgments are more closely
reasoned and somewhat formalistic in the sense that they are not self-explanatory
and are therefore not as elaborate and loquacious as common-law judgments,
which tend to restate the law in terms broader than required by the specific case.
Appellate judgments in the civil tradition usually answer legal questions put to
that court (a “cour de cassation”) and refer the case back for finalization to the
lower court while such judgments in the common-law tradition may raise new
legal issues and may involve a reconsideration of the factual underlay and usually
lead to the final disposal of the case without a reference back. Dissenting or
concurring judgments are also not widespread in the civil tradition.”
These remarks, which are applicable not only to German and English
judgments, explain in part the limited use of civil-law precedents in this work.
12
CHAPTER I
The learned judge [in the trial court] relied heavily upon the [UK]
judgment of Aldous LJ in Philips Electronics NV v Remington Consumer
Products Ltd [and the judgment of] the European Court of Justice in
Koninklijke Philips Electronics NV v Remington Consumer Products
Ltd. These judgments all have persuasive force because s 10 of
the [South African Trade Marks] Act is based upon the First Council
Directive 89/1988 of the Council of the European Communities “(t)o
approximate the laws of the Member States relating to trade marks”.
The British Trade Marks Act had to conform to the Directive and its
interpretation by the ECJ binds the English Courts. This does not
mean that we are bound to follow these authorities. The Act remains
a South African statute, which must be interpreted and applied in
the light of our law and circumstances. Local policy considerations
may differ from those applicable in Europe. The application of rules
remains, even in Europe, a matter for local courts and they differ
occasionally amongst themselves.
13
INTRODUCTION
same, stemming as they do from the EPC”. Thus, the EPO (or
another national court) and a national court may come to different
conclusions because they have different evidence or arguments, or
because they assess the same competing arguments and factual
or expert evidence differently, or, particularly in a borderline case,
because they form different judgments on the same view of the
expert and factual evidence.
7. Intangible property right: Much has been written about the nature and
meaning of IP rights but they can best be described as intangible property
rights or rights in ideas. As a WIPO publication explained:4
3 See, for instance, Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the
enforcement of intellectual property rights, OJ, 2004, L195/16. There is little, if anything, in the Directive that does not
accord with the procedural law of common-law countries.
4 Intellectual Property: A Power Tool for Economic Growth, (WIPO Publication No 888) p10-11.
14
CHAPTER I
The word “property” is used to describe this value, because the term
applies only to inventions, works and names for which a person or
group of persons claim ownership. Ownership is important because
experience has shown that potential economic gain provides a
powerful incentive to innovate.”
15
INTRODUCTION
The French equivalent propriété intellectuelle and also the Spanish propiedad
intelectual, the German geistiges Eigentum and the Dutch geestelijk
(immateriële) eigendom have the same meaning, implying intangible or
immaterial (rather than physical) property that is the product of the intellect
or of a mental process. These terms, however, are usually reserved for literary
and artistic works, in other words, copyright and related rights.
The term “industrial property”, derived from French law, covers (as indicated
in the Paris Convention for the Protection of Industrial Property (1883))5
Consequently, the term excludes copyright and related rights (i.e. rights
relating to performances of performing artists, phonograms, and broadcasts).
Underlying the distinction is the theory that copyright concerns artistic
creations and is not dependent on formalities (such as registration) for its
subsistence, whereas industrial property concerns creations that are essentially
for industrial purposes, and the rights are dependent on compliance with
prescribed formalities. Furthermore, the owner of copyright has a moral
right in the creation whereas the owner of industrial property has no such
right. The problem is that the supposition that copyright is concerned with
artistic creations only is no longer true; on the contrary, copyright has taken
on a life of its own and has become an important industrial asset because it
covers, for example, computer programs, architectural drawings, engineering
drawings and collections of data.6
10. “Intellectual property” is a catch-all phrase: That is not the end of the
list. Conventions also deal with the protection of rights related to copyright
(mentioned earlier); the rights of breeders of new varieties of plants;7 and
5 For a general discussion of the subject: Brad Sherman and Lionel Bently The Making of Modern Intellectual Property
Law - The British Experience, 1760-1911 (1999).
6 Computer programs and collections of data are covered by the WIPO Copyright Treaty, 1996.
7 International Convention for the Protection of New Varieties of Plants: www.upov.int.
16
CHAPTER I
Prof. David Vaver answered the question: “So what is intellectual property?”
as follows:10
This explains why some argue that IP law has only a utilitarian basis. According
to Prof James Boyle, IP law lacks a coherent theoretical basis:11
8 JWH Group Pty Ltd v Kimpura Pty Ltd [2004] WASC 39 [Australia].
9 Free Software, Free Society: The Selected Essays of Richard M Stallman (ed J Gay).
10 Intellectual Property: The State of the Art [2001] VUWLReview2.
11 A Politics of Intellectual Property: Environmentalism for the Net? [1997] Duke Law Review 87.
17
INTRODUCTION
– not because these are not worthy of protection but because of the difficulty
of accommodating them under traditional IP concepts. Others do not.12
The main reason why it is thought that IP should accommodate these rights
is because of a few misguided but dramatic attempts to monopolize aspects
of ITK through patents (for turmeric), copyright in yoga moves (in the USA)
and trademarks (in New Zealand of religious symbols). Although these
instances support the argument, the answer is that these appropriations
were more apparent than real. The inventions were not new, the works not
original, and the trademarks contra bonos mores. Attempts at over-reaching
(covetous claiming) are common in all IP fields.
The problem, on the other hand, is that these new order rights will create
immutable and perpetual monopolies. Furthermore, the balances that IP
systems have developed will not apply to them such as: the idea that what is
in the public domain is open to all and may not be appropriated by anyone;
that IP rights have a limited lifespan; that they may not be exploited against
the public good; and that they must provide a quid pro quo.
Since these issues are still the subject of debate and negotiation at WIPO and
nothing conclusive has eventuated, they are not dealt with in this work.13
12. Subjects covered by this book: The main areas of enforcement are in
the field of trademarks, copyright, patents, designs and unfair competition,
and these are dealt with in the subsequent chapters. The other areas
mentioned do not give rise to much litigation and can be discounted for
present purposes.
12 For example John T. Cross Property Rights and Traditional Knowledge Potchefstroom Electronic Law Journal, Vol. 13, No.
4, 2010: http://ssrn.com/abstract=1772527; GTZ publication Triggering the Synergies between Intellectual Property Rights
and Biodiversity (2011): www.gtz.de/en/dokumente/gtz2010-en-iprs-and-biodiversity-reader.pdf.
13 Compare Adam Andrzejewski Traditional Knowledge and Patent Protection: Conflicting Views on International Patent
Standards Potchefstroom Electronic Law Journal Vol. 13, No. 4, 2010: http://ssrn.com/abstract=1772524.
14 This issue is raised again under different headings in later chapters.
18
CHAPTER I
Not everyone will agree with the assumption of Judge Markey that property
rights are human rights but his statement is otherwise acceptable within the
common-law tradition. But there is also another perspective, namely that
these rights are in part positive and in part negative:15
15 Marie-Françoise Marais & Thibault Lachacinski L’application des Droits de Propriété Intellectuelle (WIPO publication 624(F)).
16 Lucasfilm Ltd v Ainsworth [2009] EWCA Civ 1328, [2011] UKSC 11; Gallo Africa v Sting Music [2010] ZASCA 96.
17 Alexander Peukert Territoriality and Extraterritoriality in Intellectual Property Law: http://ssrn.com.
19
INTRODUCTION
20
CHAPTER I
17. TRIPS obligations: Countries that are members of the World Trade
Organization (WTO) are parties to the Agreement on Trade-Related Aspects
of Intellectual Property Rights, also known as TRIPS. TRIPS requires of
Members of the WTO to have laws in place that provide for different kinds
of IP protection. The full range is not covered but the following are:
Local laws have to comply with the minimum standards for IP protection laid
down by TRIPS. In addition to the substantive provisions, and importantly,
TRIPS places an obligation on Member countries to provide certain procedural
remedies (most of which are fairly common in both the civil- and common-
law traditions) that are to be at the disposal of rights holders.
18. The TRIPS Agreement sets minimum standards and Member countries
are free to impose greater standards: Article 1.1 provides:
19. TRIPS compliance by Member States: For present purposes it will be assumed
that all members of the WTO do comply with the minimum requirements laid
down by TRIPS. This assumption is not necessarily correct for many reasons22.
Because local legislation has to comply with the TRIPS Agreement, TRIPS
provides a benchmark for legislation and useful background material in
interpreting IP statutes. Since these laws are in consequence based on the
same treaty text, foreign judicial precedents are extremely valuable.
22 Attention is drawn, for instance, to the fact that, in accordance with Article 66 TRIPS, least-developed countries who
are Members of the WTO have until 2013 to comply with the TRIPS provisions (and until 2016 for the provisions on
pharmaceuticals), without prejudice to a further extension if so decided by the Council for TRIPS.
21
INTRODUCTION
20. TRIPS Plus obligations: The TRIPS Agreement had some offspring.
Some multilateral and bilateral agreements between states impose for
commercial reasons additional IP enforcement obligations on those states.
These are called TRIPS Plus Agreements because the obligations are more
onerous than those envisaged by TRIPS.
23 The European Commission announced, in a communication of May 24, 2011, a wide-ranging strategy on IPR, including
a review of the IPR Enforcement Directive in 2012 (see: http://ec.europa.eu/internal_market/copyright/docs/ipr_strategy/
COM_2011_287_en.pdf).
22
CHAPTER I
(although in the case of trademark registrations the rights may have some
retroactive effect). The subsistence of copyright, on the other hand, does
not depend on any formalities such as registration. The difference is
important because a copyright owner, although assisted by presumptions,
must prove in each instance the subsistence of copyright and his claim to
it while, in the case of registered rights, these may be proved simply by
producing the certificate of grant. The onus rests on the person who wishes
to attack the validity of a registration of a patent or trademark to prove
the invalidity. (Some countries - like the USA and certain South American
countries - have a copyright registration system for purposes of enforcement
and for creating presumptions concerning the subsistence of copyright but
not as a requirement for subsistence.)
In this regard Justice Cao Jianming, at the time Vice President of the Supreme
People’s Court of the People’s Republic of China, said extra-judicially:25
24 Cf. Vichai Aryanuntaka Enforcement of IP rights under Trips: A case study of Thailand; Gregor Urbas Public
enforcement of IP rights (2000) Australian Institute of Criminology No 177, both available on the internet.
25 To Implement the Judicial Interpretation on the Protection of Intellectual Property Rights from the Perspective of
Criminal Law, and Strengthening the Judicial Protection on IPR, Dec 21, 2004; www.chinaiprlaw.com/english/forum/
forum63.htm.
23
INTRODUCTION
24. No special status: Few legal systems accord any special treatment to
IP rights.27Those with constitutions or other laws that protect basic human
rights usually provide that no one may be deprived of property except in
terms of a law of general application, and that no law may permit arbitrary
deprivation of property. This means that, although no one has a basic
human right or entitlement to IP rights, when they exist they are entitled to
full legal protection.
26. Impact of bills of rights: Bills of rights have a potential impact on the
enforcement of IP rights, as have international human rights instruments
such as the European Convention of Human Rights. IP laws are not immune
to constitutional challenge. The basic rights usually in issue are the freedom
of expression,30 the right to privacy and the right to property.31 In countries
that guarantee social rights, the impact may be greater and possible
arguments about the scope and enforceability of pharmaceutical patents
may arise in relation to the right to health care services or children’s rights;
and copyright claims may have to be tested against the right to education
and the right to access of information.
26 Cf. Intellectual Property and Human Rights (WIPO publication no 762 (E)) 1999.
27 Cf. Canada’s Constitution Act 1867 s 91(22) and (22).
28 Art. I, par. 8, cl. 8.
29 The issue is fairly complex: Thomas B Nachbar Intellectual property and constitutional norms [104] 2004 Columbia LR
272. For an Australian example: Grain Pool of WA v The Commonwealth [2000] 170 ALR 111 (HCA).
30 Ashdown v Telegraph Group Ltd [2001] EWCA Civ 1142 [England]; Laugh It Off Promotions CC v SAB International
(Finance) BV [2004] ZASCA 76 and [2005] ZASCA 7 [South Africa]. Cf. Lange v ABC (1997) ALR 96 [Australia] discussed
by Megan Richardson Freedom of political discussion and intellectual property law in Australia [1997] EIPR 631. Robert
Burrell and Dev Saif Gangjee Trade Marks and Freedom of Expression: A Call for Caution: University of Queensland TC
Beirne School of Law Research Paper No. 10-05: ssrn.com/abstract=1604886.
31 Pinto The influence of the European Convention on Human Rights on intellectual property rights [2002] EIPR 209.
24
CHAPTER I
27. The case for IP rights: It does not fall within the scope of this work to
set out the case either for or against the recognition of IP rights.32The end
of the debate is not near. As explained by Carlos M Correa:33
There is, however, a direct correlation between IP activity (for instance, the number
of patent applications) in any given country and its economic development.
“Ideas are expensive to produce but cheap to copy. The fixed costs
of producing knowledge are high. Hollywood blockbusters can costs
hundreds of millions of dollars to make and research and development
for drugs can cost billions of pounds. At the same time, the marginal
costs of production, both for drugs and for digital files, are very
low. Without protection, others will free ride on the creator’s initial
investment and sell the invention or creation at a much lower cost. If
the innovator knows that someone else can do this easily, there will
be no financial incentive to innovate in the first instance.”
32 See especially Intellectual Property: A Power Tool for Economic Growth WIPO Publication No 888.
33 “Intellectual Property and Competition Law” ICTSD paper 21: iprsonline.org.
25
INTRODUCTION
“The plight of the gifted and rich (and sometimes famous) usually
fails to elicit much sympathy. But perhaps what is easily overlooked
is that success is hard to win, and often harder to retain. This is
very much the case for the products of human inventiveness and
creativity – intangible assets that can be quite costly to obtain, that
may be extremely valuable to society at large, but that can be copied
and/or imitated very easily.”
Legal texts do not usually quote statements of politicians but this speech of
the President of the Peoples’ Republic of China makes a clear case for the
recognition and protection of IP rights where he stressed -
34 www.brandeins.de/home/.
35 Intellectual Property Rights and the World Trade Organization: Retrospect and Prospects – Working Paper 03-WP 334
May 2003.
36 May 27, 2006: 31st collective study of the CCP Central Committee’s Political Bureau.
37 For particulars see www.wto.int.
26
CHAPTER I
has the freedom to determine the grounds upon which such licenses
are granted; and has the right to determine what constitutes a national
emergency or other circumstances of extreme urgency for this purpose. It
was also understood that public health crises, including those relating to HIV/
AIDS, tuberculosis, malaria and other epidemics, can represent a national
emergency or circumstance of extreme urgency (An amendment to TRIPS
relating to compulsory licenses for pharmaceutical products has been agreed
to by the Council of WTO during December 2005 but still has to be accepted
by its members.).
The debates at the World Health Organization (WHO) are proof of a growing
disagreement between countries about the justification of the protection of
at least some IP rights. They also show that within individual governments
there are conflicting views. Those responsible for economic growth are
in favor of the protection of IP rights while those concerned with health
issues are opposed thereto. Although the WHO had created a global
coalition of stakeholders called IMPACT (International Medical Products
Anti-Counterfeiting Taskforce) to combat counterfeit medicines there was
a growing antipathy from some quarters against IMPACT. In January 2012,
the WHO Executive Board agreed to propose to the WHO General Assembly
the establishment of a new mechanism for international collaboration on
counterfeit and substandard medical products, though excluding trade and
intellectual property issues.38
28. IP rights and monopolies: This quotation deals with patents but the
same point is later made in relation to trademarks.
If the patent be valid, it takes nothing from the public, as does the
“monopoly” against which our anti-trust laws are directed. On the
contrary, it gives to the public, by definition, that which the public
never before had. That a patent, like stocks, bonds and other property,
27
INTRODUCTION
This [particular case] is not a moral tussle between the good and the
bad, the small and the large. It is a fight over profits by competitors.39
29. Balancing of rights and obligations: The objectives of TRIPS are such as
to require a balancing of rights and obligations (Art. 7):
Our court has often spoken of the balance struck under the Patent
Act in which the public gives an inventor the right to prevent
anybody else from using his or her invention for a period of 20 years
in exchange for disclosure of what has been invented. As a general
rule, if the patent holder obtains a monopoly for something which
does not fulfill the statutory requirements of novelty, ingenuity and
utility, then the public is short-changed.
28
CHAPTER I
care costs while being fair to those whose ingenuity brought the
drugs into existence in the first place.
31. IP rights and competition law:40 It has been said that the fact that you
own a hammer does not entitle you to hit someone else over the head with
it. The same applies to IP rights. An IP right, like any other right, may not be
used in such a manner that it breaches competition laws.41 This is confirmed
by Article 8.2 of the TRIPS Agreement, which states that “appropriate
measures, provided that they are consistent with the provisions of this
Agreement, may be needed to prevent the abuse of intellectual property
rights by right holders or the resort to practices which unreasonably restrain
40 In general Pierre Régibeau & Katharine Rockett The Relationship between Intellectual Property Law and Competition
Law: An Economic Approach: essex.ac.uk/economics/discussion-papers/.
41 Orange Book Standard Case KZR 39/06 May 6, 2009 [BGH].
29
INTRODUCTION
32. Justifying enforcement: Rights have no value unless they can be enforced
effectively, and since IP rights are internationally and statutorily recognized
rights they must be respected, irrespective of their exclusivity. Judges and others
with an anti-monopolistic mindset should beware that their mindset does not
contaminate their attitude towards rights holders. IP litigation –
42 Op. cit.
43 Brenner v Manson 383 US 519, 534-35 (1966).
44 Robert M Sherwood The economic importance of judges, paper read at International Judges’ Conference on IP
Law, Washington DC, Oct 1999. There are a number of studies on this aspect published by the World Bank and the
International Finance Corporation. Not all agree.
30
CHAPTER I
only licenses to spend money in pursuing court actions, patents will fail
to fulfill their promise to stimulate innovation.”45
In addition, as will appear from the chapters dealing with counterfeiting and
piracy, the infringement of IP rights is often the result of criminal activities
that impinge on other public interests such as the prevention of organized
crime, public health concerns and the protection of the public purse.
33. IP rights are not absolute: IP rights are not supreme and “we must
stop thinking of intellectual property as an absolute and start thinking of
it as a function”.46
Among the precedents quoted the reader will from time to time find useful
instances where courts have embarked on this balancing act.
35. The overlap of rights: The same commercial object may incorporate
or reflect different IP rights and the same intellectual endeavor may be
protected by more than one IP right. For instance, a label may be entitled
to trademark and copyright protection and a container may be entitled to
both trademark and design protection. This, however, does not justify the
blurring of the differences between the different IP rights; each must be
kept within its strict statutory limits.48
45 Norman L Balmer, paper read at the same International Judges’ Conference on IP Law.
46 Per McLachlin CJC quoted by David Vaver Canada’s intellectual property framework: a comparative overview [17]
Intellectual Property Journal 125 187.
47 Theberge v Galeried’Art du Petit Champlain 2002 SCC 34 [Canada] discussed by David Vaver “Need intellectual
property be everywhere? Against ubiquity and uniformity” [25] 2002 Dalhousie Law Journal 1.
48 Roland Corp. v. Lorenzo & Sons Pty Ltd (1991) 105 ALR 623, affirmed (1992) 23 IPR 376 [Australia].
31
INTRODUCTION
36. The problem of weak rights: Teresa Scassa pointed to the danger of
weak rights:
32
CHAPTER I
I. JURISDICTION
37. .Jurisdiction and territoriality: The point has already been made that IP
rights are territorial. That does not mean that there cannot be jurisdictional
issues because it is necessary to distinguish between judicial competence
and legislative competence.
49 Teresa Scassa Extension of intellectual property rights prepared for the Competition Bureau of Canada and Industry
Canada, April, 2007 (unpublished).
50 The American Law Institute Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in
Transnational Disputes Proposed Final Draft (March 30, 2007).
33
INTRODUCTION
Within the European Union (and some other countries) the matter is
determined or influenced by the Brussels Convention on Jurisdiction and the
Enforcement of Judgments in Civil and Commercial Matters 1968 and the
Lugano Convention on Jurisdiction and the Enforcement of Judgments in
Civil and Commercial Matters. These have to some extent been superseded
by the Brussels Regulations.53
34
CHAPTER I
40. Basic jurisdictional principles: The first rule of jurisdiction is that the
court of residence or domicile of the defendant is the primary court with
jurisdiction. This means that a court must have jurisdiction over the person
of the defendant.
41. Case law on the Brussels and Locarno Conventions: The European Court
of Justice had to deal with the issue of jurisdiction in two important decisions.
In the first59 it held that a German court was not entitled to determine the
consequences of an alleged patent infringement activity in France when the
case required a determination of the validity of a French patent and in the
56 Stefan Luginbuehl & Heike Wollgast The Hague Convention on Choice of Court Agreements: Perspectives for IP
Litigation Festschrift fürJochenPagenberg (2006) 321-350.
57 Lucasfilm Ltd v Ainsworth [2009] EWCA Civ 1328 overruled by Lucasfilm Ltd v Ainsworth [2011] UKSC Civ 11. See also
Gallo Africa v Sting Music [2010] ZASCA 96.
58 The American Law Institute Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in
Transnational Disputes Proposed Final Draft(March 30, 2007).
59 ECJ, 13 July 2006,GesellschaftfürAntriebstechnikmbH& Co KG /Lamellen und KupplungsbauBeteiligungs KG, C-4/03,
ECR 2006, I-6509.
35
INTRODUCTION
second it held that a Dutch court was not entitled to join foreign defendants
to a patent infringement suit involving a resident defendant.60
VODAv CORDISCORP
476 F.3d 887 (Fed. Cir. 2007)
60 ECJ, 13 July 2006, Roche Nederland and others / Primus and Milton Goldenberg., C-539/03, ECR 2006, I-6535.
61 ECJ, 15 November 1983, Duijnstee, 288/82, ECR 1983, 3663.
62 Taken from R Griggs Group Ltd v Evans (No 2) [2004] EWHC 1088 (Ch).
36
CHAPTER I
But where the action is not concerned with registration or validity, the
Convention gives jurisdiction to the courts of the defendant’s domicile;
or to the courts of other Contracting States in accordance with Articles
5 and 6. The question ‘can the English court inquire into the validity of
a patent granted by a Contracting State’ is answered by Article 16(4).
The question ‘does the English court have jurisdiction to entertain
proceedings in respect of the alleged infringement of an intellectual
property right conferred by the law of a Contracting State where the
proceedings fall outside Article 16(4),’ is answered by Articles 2, 5 or 6.”
42. Selection of precedents: Precedents that state general propositions and not
merely parochial ones were, as far as possible, chosen. The reader will notice
that the precedents used are from a limited number of jurisdictions. The reason
for the selection of any particular judgment is often fortuitous but the degree of
judicial activity in the field of IP because of economic factors, and the availability
of judgments, especially on the Internet were usually determinative.
37
INTRODUCTION
It is part of the common-law tradition to name the judge who wrote the
judgment; while in the civil-law countries there is no indication of who was
responsible for composing the judgment (sometimes the names of the judges
who heard the case are not even given). In some jurisdictions the same names
crop up regularly. This is because in those courts the IP judgments are usually
allocated to the same judges to write. The civil-law tradition will be followed.
44. Insertions and omissions: Except for a few instances, the extracts from
judgments are relatively short and do not deal with the facts of the case.
Facts are given if necessary for understanding the extract. In a chapter
such as on patents, very few facts are stated because the facts are difficult
to restate and add little to an understanding of the underlying principle.
Square brackets [ ] indicate the few insertions.
In order to improve readability omissions are not shown. Words, phrases and
paragraphs have been omitted in order to create (what the author wishes
to believe) a userfriendly text. So, too, long paragraphs have been broken
up into shorter ones and if a judgment dealt with more than one issue, the
judgment may have been subjected to the same treatment. And bullets have
been used instead of numbering where appropriate.
45. Spelling and style: The author’s text is in US English because that is the
house style of WIPO. This means, for instance, that the noun “licence” is
given as “license” and “favour” as “favor”. In the quotations the original
spelling has, as far as practicable, been retained although a few changes
to spelling and style were made for the sake of uniformity. Likewise, the
citations within quotations were, if not omitted, standardized.
46. Repetition: Acting on the assumption that this book will be used as a
reference work only and will not be read like a novel, there is some repetition
of material in order to improve the coherence of a particular subject.
38
CHAPTER I
K. USEFUL WEBSITES
47. The following internet sources are useful: They all provide free access
to laws, law reports and related material. But if all else fails a search on a
general search engine may produce something useful.
These sites are especially important for treaties and conventions and
judgments of the Court of Justice of the European Union and judgments on
domain name decisions:
Particular countries:
Asia: www.asianlii.org/
Australia: www.austlii.edu.au
Belgium: http://www.juridat.be/
Brazil: www.stf.gov.br/jurisprudencia/nova/jurisp.asp
Canada: www.canlii.org/
France: http://www.legifrance.gouv.fr/initRechJuriJudi.do
63 It contains the case-law of both the Court of Justice and the General Court (the new denomination of the Court of
First Instance since December 1, 2009). These two courts are competent to render judgments in IP matters. For more
information on the respective role of these courts, see: http://curia.europa.eu/jcms/jcms/Jo2_6999/
39
INTRODUCTION
India: judis.nic.in/supremecourt/chejudis.asp
Ireland: www.ucc.ie/law/irlii/index.php
Japan: http://database.iip.or.jp/cases/
Netherlands: http://zoeken.rechtspraak.nl
Portugal: www.dgsi.pt/
Singapore: www.commonlii.org/sg/cases/
Spain: www.poderjudicial.es/jurisprudencia/
www.wipo.int/enforcement/en/
http://ec.europa.eu/internal_market/iprenforcement/observatory/index_en.htm
www.oecd.org/
www.ccapcongress.net
www.iccwbo.org/bascap
www.cybercrime.gov.
www.usdoj.gov/criminal/cybercrime/ipmanual/
40
TRADEMARKS:
General Principles
CHAPTER II
I
41
TRADEMARKS: GENERAL PRINCIPLES
3. National treatment: TRIPS (Art. 3.1), like the Paris Convention, requires
that each Member State must, in relation to the protection of trademark
rights, treat nationals of other Member States no less favorably than it treats
its own nationals. This is referred to as “national treatment”.
5. ECJ judgments: Reference will, from time to time, be made to the terms
of the Directive, and ECJ judgments will be cited. These are easily accessible
on the Internet.69 It should, however, be borne in mind that the ECJ70 is
64 For the sake of consistency the term “trademark” is used, both as an adjective and a noun, and all uses of “trade mark”
have been changed accordingly.
65 The Paris Convention for the Protection of Industrial Property of March 20, 1883 as revised available at www.wipo.int.
66 www.oami.eu.int/l.
67 Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the
Member States relating to trade marks, replacing the First Council Directive 89/104/EEC of 21 December 1988: http://
eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:299:0025:0033:EN:PDF.
68 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:078:0001:0042:EN:PDF.
69 http://curia.europa.eu/jcms/jcms/j_6/.
70 The Court of Justice must be distinguished from the General Court. For more information on this distinction, see: http://
curia.europa.eu/jcms/jcms/Jo2_6999/
42
CHAPTER 2
As that summary makes clear, the 1994 Act is a hybrid. There are
two main European sources: the Directive, aimed at harmonization
of the national trademarks laws, and the Regulation, introducing the
new Community trademark. However, many of the basic concepts
are derived, in some cases solely, from previous domestic law. Old
authorities may be of assistance, but “it should not be forgotten at
any point that the system is fundamentally different and frequently
demands a fresh look.”71
71 Quoting Kerly’s Law of Trademarks and Trade Names 13 ed. para 1.11.
72 In the UK in s 2(1): “A registered trademark is a property right obtained by the registration of the trademark under this
Act” and s 22: “A registered trademark is personal property (in Scotland, incorporeal moveable property).”
73 Quoted in Inter Lotto (UK) Ltd v Camelot Group Plc [2003] EWHC 1256 (Ch).
43
TRADEMARKS: GENERAL PRINCIPLES
ANHEUSER-BUSCH v PORTUGAL
European Court of Human Rights Grand Chamber
June 28, 2006
The Court takes due note of the bundle of financial rights and
interests that arise upon an application for the registration of a
trademark. It agrees that such applications may give rise to a
variety of legal transactions, such as a sale or license agreement
for consideration, and possess – or are capable of possessing – a
substantial financial value. With regard to the submission that
dealings in respect of applications for the registration of a mark
are of negligible or symbolic value only, it is noted that in a market
economy, value depends on a number of factors and it is impossible
to assert at the outset that the assignment of an application for the
registration of a trademark will have no financial value.
44
CHAPTER 2
Unlike the patent owner or the copyright owner, the owner of a trademark
is not required to provide the public with some novel benefit in exchange
for the monopoly. The trademark owner, by contrast, may simply have
used a common name as its “mark” to differentiate its wares from those of
its competitors. Its claim to monopoly rests not on conferring a benefit on
the public in the sense of patents or copyrights but on serving an important
public interest in assuring consumers that they are buying from the source
from whom they think they are buying and receiving the quality which they
associate with that particular trade-mark. Trademarks thus operate as a
kind of shortcut to get consumers to where they want to go, and in that
way perform a key function in a market economy. Trademark law rests on
principles of fair dealing. It is sometimes said to hold the balance between
free competition and fair competition.
45
TRADEMARKS: GENERAL PRINCIPLES
DRISTAN Trademark
[1986] RPC 161(SC) [India]
46
CHAPTER 2
There are cyber-squatters and there are those who squat on the
trademark register. Judged by the papers in this case the [plaintiff]
is an entity that used the register to stifle competition and not for
its statutory purpose. The fact that there is no opposition to an
47
TRADEMARKS: GENERAL PRINCIPLES
12. The right to use and exclude: The registration of a trademark, if valid,
gives to the registered proprietor of the trademark the exclusive right to the
use of the trademark in relation to the goods or services in respect of which
the trademark is registered. Some statutes, such as the Indian Act, state this
explicitly; others do so by implication.
DRISTAN Trademark
[1986] RPC 161(SC) [India]
At the same time a trademark right enables the owner to prevent others
from using the mark as a trademark. It is often described as a negative
right because (so the argument goes) the existence of the right does not
necessarily mean that the owner has a right to use it at all times and under
all conditions.
48
CHAPTER 2
75 Use must be genuine use: Silberquelle GmbH v Maselli-Strickmode GmbH Case C-495/07 (ECJ).
49
TRADEMARKS: GENERAL PRINCIPLES
DRISTAN Trademark
[1986] RPC 161(SC) [India]
HÖLTERHOFF v FREIESLEBEN
Case C-2/00 [ECJ]
The Advocate General reported:
50
CHAPTER 2
76 Quoted in AM Moolla Group Ltd v Gap Inc [2005] ZASCA 72 [South Africa].
51
TRADEMARKS: GENERAL PRINCIPLES
upon which our trademark law is presently based. Both the United
States and Spain have long adhered to the Paris Convention for
the Protection of Industrial Property. Section 44 of the Lanham Act
incorporates the Paris Convention into United States law, but only “to
provide foreign nationals with rights under United States law which
are coextensive with the substantive provisions of the treaty involved.”
77 Quoting J. Thomas McCarthy McCarthy on Trademarks and Unfair Competition §29:25 (4 ed 2002).
52
CHAPTER 2
WING JOO LOONG GINSENG HONG (SINGAPORE) CO PTE LTD v QINGHAI XINYUAN
FOREIGN TRADE CO LTD
[2009] SGCA 9 [Singapore]
It is for this reason that a mark or sign has to have a certain level of
distinctiveness before it can be registered as a trade mark. According
to the learned author of Ng‑Loy’s Intellectual Property, there are three
thresholds of distinctiveness vis-à-vis trademarks, as follows:
53
TRADEMARKS: GENERAL PRINCIPLES
The law of unfair trade comes down very nearly to this - as judges have
repeated again and again - that one merchant shall not divert customers
from another by representing what he sells as emanating from the
second. This has been, and perhaps even more now is, the whole Law
and the Prophets on the subject, though it assumes many guises.
His mark is his authentic seal; by it he vouches for the goods which
bear it; it carries his name for good or ill. If another uses it, he
borrows the owner’s reputation, whose quality no longer lies within
has own control. This is an injury, even though the borrower does
not tarnish it, or divert any sales by its use; for a reputation, like a
face, is the symbol of its possessor and creator, and another can use
it only as a mask. And so it has come to be recognized that, unless
the borrower’s use is so foreign to the owner’s as to insure against
any identification of the two, it is unlawful.
54
CHAPTER 2
55
TRADEMARKS: GENERAL PRINCIPLES
BREAKFAST -DRINK II
Federal Supreme Court (BGH), ruling of December 20, 2001 - I ZR 135/99 [Germany]:
56
CHAPTER 2
The trademark also has the function to indicate the origin of goods
and to act as a guarantee; based on the former, the trademark gives
the consumer the possibility to grant an origin to the product, while
the latter guarantees to the consumer that all the products bearing
the same brand are of the same quality, which means that by buying
the same product or requesting the same service, the consumer
wishes to encounter the same quality or even better quality than
that of the previously acquired product or service.
57
TRADEMARKS: GENERAL PRINCIPLES
A trademark must offer a guarantee that all the goods bearing it have
originated under the control of a single undertaking which is responsible
for their quality. It does not, however, provide a legal guarantee of quality
but trademark owners know that consumers rely on the fact that they have
an economic interest in maintaining the value of their marks. Trademarks,
accordingly, provide a commercial guarantee of quality.
58
CHAPTER 2
21. Application of the badge of origin concept: The German Federal Court
held that the use of a Ferrari car as a prize in an advertisement for liquor did
not infringe the Ferrari trademark.
59
TRADEMARKS: GENERAL PRINCIPLES
FERRARI v JÄGERMEISTER AG
BGH, ruling of November 3, 2005 - I ZR 29/03 [Germany]
78 ECJ, 16 November 2004, Anheuser-Busch / Budĕjovický Budvar, C-245/02, ECR 2004, I-10989.
60
CHAPTER 2
That is the case, the ECJ said, where the use of the mark is such
that it creates the impression that there is a “material link in trade
between the third party’s goods and the undertaking from which
those goods originate”. There can only be primary trademark
infringement if it is established that consumers are likely to
interpret the mark, as it is used by the third party, as designating
or tending to designate the undertaking from which the third
party’s goods originate.
L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
61
TRADEMARKS: GENERAL PRINCIPLES
62
CHAPTER 2
80 Huang Hui Effects of Distinctiveness of Trademarks on their Registration and Protection: www.cpahkltd.com/Publications/
Article/Ehh992.html. On descriptive marks see ECJ, 25 February 2010, Lancôme / OHIM, C-408/08 P, ECR 2010, I-1347.
63
TRADEMARKS: GENERAL PRINCIPLES
To a much greater degree, this case illustrates the break with our
domestic past brought about by the 1994 Act. The words, for
which the first two initials stand, are merely laudatory words, the
64
CHAPTER 2
mark consists purely of initials and the words connoted by the initials
are mere descriptors. This concatenation of features would have
made it difficult for this mark to survive the present attack under our
pre-1994 Act domestic law. If King Canute had been a trademark
agent, the waters of Community law, which Lord Denning depicted
as rushing up our native shores, would surely have overwhelmed him
by now.81 As the respondent submits, one has to start by forgetting
the preconceptions of pre-1994 Act trademark law. The territory
that can be occupied by registered trademarks has been significantly
enlarged by the 1994 Act, and traders who use such marks without
consent must increasingly rely on the limits as to the effect of a
registered trademark, set out in s 11 of the 1994 Act.
81 According to legend, King Canute rebuked his flattering courtiers by showing that the sea would not retreat at his
command.
82 Coca-Cola Trademarks [1986] RPC 421 (HL).
83 ECJ, 29 April 2004, Henkel / OHIM, joined cases C-456/01 P and C-457/01 P, ECR 2004. I-5089.
84 ECJ, 18 June 2002, Philips / Remington, C-299/99, ECR 2002, I-5475.
65
TRADEMARKS: GENERAL PRINCIPLES
Even if such a mark achieves registration, that does not make the
manufacture and sale of similar artifacts into a use of the mark as
a trademark.
85 A number of these grounds were discussed in detail in Wing Joo Loong Ginseng Hong (Singapore) Co Pte Ltd v Qinghai
Xinyuan Foreign Trade Co Ltd [2009] SGCA 9.
66
CHAPTER 2
67
TRADEMARKS: GENERAL PRINCIPLES
The more a trademark is descriptive of the goods or services, the less likely
it will be capable of distinguishing them in this sense. If a trademark is
primarily descriptive, it requires “sufficient capricious alteration” to be able
to perform a trademark function.
The fact that a trademark, by use, has become such as to denote goods or
services of a particular origin, does not necessarily mean that it is capable of
distinguishing those goods or services in the trademark sense. In particular,
the shape of a product, which gives substantial value to that product, cannot
constitute a trademark even where, prior to the application for registration,
it acquired attractiveness as a result of its recognition as a distinctive sign
following advertising campaigns presenting the specific characteristics of the
product in question.88
88 ECJ, 20 September 2007, Benetton Group / G-Star International, C-371/06, ECR 2007, I-7709.
68
CHAPTER 2
[The section] must be read in context. It also deals on the same basis
with marks that may designate the kind, quality, quantity, intended
purpose, value, or other characteristics of the goods or services. It
is not concerned with distinctiveness or its loss. That is dealt with
in [another provision]. The prohibition is not directed at protecting
trademark use only but goes wider: it is sufficient if the name may
“designate” the geographical origin of the goods or services.
It has been said that the provision serves a public interest permitting
all to use such descriptive signs freely by preventing them from
being reserved to one undertaking alone because they have been
registered as trade marks (Peek & Cloppenburg para 32). In addition
69
TRADEMARKS: GENERAL PRINCIPLES
This leads to another aspect and that concerns the nature of the
goods or services. London has at least since the 18th Century had
an association with gin. But Bloemfontein does not have one and
there appears to be no reason why the name Bloemfontein per se
cannot be used as a trade mark for gin in the same way as Windhoek,
a well-known trade mark and the capital of Namibia, is used as a
trade mark for beer. The explanation is to be found in Bellagio
LLC’s Application [2006] ETMR 79. The applicant sought to register
the trade mark “Bellagio” in four different classes namely class 25
for clothing; class 35 for retail services; class 41 for entertainment
services; and class 42 for hotels and the like. The application was
granted in respect of the first two classes but refused in relation to
the last two. The reasons, in summary, were these: Bellagio is a
village on Lake Como in Northern Italy; it is a noted lakeside resort;
the travelling public would associate the name of the village with
entertainment and hotels; and therefore the mark could not be
registered in connection with these services. However, the public
would not necessarily associate the village with clothing or retail
services and in connection with those services the prohibition did
not apply.
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CHAPTER 2
89 See also the absolute prohibition of the registrations of signs consisting exclusively of— (a) the shape which results from
the nature of the goods themselves, (b) the shape of goods which is necessary to obtain a technical result, or (c) the
shape which gives substantial value to the goods. (UK Act s 3(2)).
90 BGH Case I ZR 17/05 – Pralinenform II (22 April 2010 [Germany].
91 In re Pacer Technology 338 F.3d 1348, 67 USPQ2d 1629 (Fed. Cir. 2003) referring to Wal-Mart Stores Inc v Samara Bros
Inc 529 US 205, 210 (2000); Two Pesos Inc v Taco Cabana Inc 505 US 763, 768 (1992); Tone Bros Inc v Sysco Corp 28
F.3d 1192, 1206 (Fed Cir 1994); and Seabrook Foods Inc . Bar-Well Foods Ltd 568 F.2d 1342, 1344 (CCPA 1977).
92 The answer is in the negative: Lego Juris A/S v OHIM – Mega Brands Inc (LEGO) Case C48-09P [ECJ].
93 Beecham Group Plc v Triomed (Pty) Ltd [2002] ZASCA 109 [South Africa].
94 Bergkelder Beperk v Vredendal Ko-op Wynmakery (105/05) [2006] ZASCA 5 [South Africa].
95 Lubbe NO v Millennium Style [2007] ZASCA 10 [South Africa].
96 Teresa Scassa The Doctrine of Functionality in Trade-mark Law Post Kirkbi (2007) 21 IPJ 87.
71
TRADEMARKS: GENERAL PRINCIPLES
72
CHAPTER 2
the product of me, the maker of the contents”. But, at the very end
of the spectrum, the shape of goods as such is unlikely to convey
such a message. The public is not used to mere shapes conveying
trademark significance. The same point was made about slogans
in Das Prinzip der Bequemlichkeit [ECJ, 21 October 2004, OHIM /
Erpo Möbelwerk C-64/02 P, ECR 2004 I-10031, par 35]:
PHILIPS RAZOR
Bundesgerichtshof [Germany]
BGH, decision of November 17, 2005 – I ZB 12/04
The item forming the contested mark was an attachment for a razor,
consisting of three razor heads arranged on a disk in the form of an
equilateral triangle.
The real obstacle to the protection of the contested mark was that
it consisted solely of a shape that the item had to take in any case
to fulfill its technical function. According to ECJ case law, the shape
of a product was not eligible for protection as a trademark if it was
proved that the essentially functional characteristics of that shape
97 But the ECJ held that the Audi slogan Vorsprung durch Technik is a valid trademark: Audi AG v OHIM Case C-398/08P
of 21 January 2010.
73
TRADEMARKS: GENERAL PRINCIPLES
33. Color marks: A distinctive color may have the necessary ability to
distinguish in the trademark law sense but it is seldom that color per se can
act as a source identifier.
The right in an abstract color mark can be infringed only where the
protected color is used as an indication of origin. This is because the
main function of a mark is to guarantee the origin of the products
or services identified by the mark to the consumer or end-user by
enabling him/her to distinguish these products or services from
products or services of other origins without risk of confusion.
74
CHAPTER 2
The protections granted to the mark owner are there to ensure that
the mark can fulfill this function, and are therefore limited to cases
in which the use of the indication by a third party may interfere with
the function of the mark – in particular, with its primary function of
guaranteeing the origin of the goods to the consumer.
98 See also the BGH Decision of 19 February 2009 – Case I ZR 195/06 –UHU.
75
TRADEMARKS: GENERAL PRINCIPLES
35. The registered owner: The right to enforce the statutory rights is usually
reserved for the registered owner of the trademark.99 This depends on the
terms of the statute.
38. Common-law and other rights are not affected: The existing common-
law (in common-law jurisdictions) or other statutory rights relating to
unregistered marks are not affected by the registration of a trademark.
99 In the UK s. 14: “(1) An infringement of a registered trademark is actionable by the proprietor of the trademark. (2) In
an action for infringement all such relief by way of damages, injunctions, accounts or otherwise is available to him as is
available in respect of the infringement of any other property right.”
100 Cf. UK s 11(1): “A registered trademark is not infringed by the use of another registered trademark in relation to goods
or services for which the latter is registered.”
76
CHAPTER 2
77
78
TRADEMARKS:
infringement
CHAPTER III
I
A. INTRODUCTION (1-5)
79
TRADEMARKS: INFRINGEMENT
A. INTRODUCTION
1. Scope of chapter: This chapter deals with the different types of
trademark infringement and some basic concepts. It must be read with
the subsequent chapters that deal with specific aspects of infringement. In
the discussion that follows the emphasis is on infringement where there is
a probability or likelihood of confusion (or confusion or deception, as some
laws will have it) between the registered mark and the allegedly infringing
mark (in US parlance, the senior and junior mark respectively). Judgments
dealing with the registration of marks will also be cited because the test for
registering a later (junior) mark is that it may not be identical or confusingly
similar to a registered (senior) mark.
This case dealt with “MacCoffee” and “McCafé”, the latter a trademark of
McDonald’s, and the Court found that the former was too close for comfort.
The next case, heavily edited for present purposes, provides a feel of the
problem. It also deals with registration matters but the underlying problems
are the same.
80
CHAPTER 3
The trial judge did not think that the subject marks were confusingly
similar, either visually or orally, with McDonald’s marks. Moreover,
the goods covered by the application marks were different from
those to which McDonald’s family of marks applied.
The crux of McDonald’s case was that, in all their marks, the
common distinctive syllable was the prefix “Mc” which was the
essential feature which links all their marks. Because of that, the
adoption by FE of the prefix “Mac” in the application marks could
give the impression that FE’s products came from the same source
as that of McDonald’s.
81
TRADEMARKS: INFRINGEMENT
Finally, we will refer to Yuen (2001) where the court disregarded the
objection of McDonald’s and allowed the registration of the mark
“McChina” in the [UK], [and] the judge [said] that McDonald’s, was
“virtually seeking to monopolize all names and words with prefix Mc
or Mac, at least in relation to food or restaurant services”.
Primary infringement consists of the use of any sign, which is identical with
the registered trademark, in relation to goods or services which are identical
with those for which the trademark is registered, in the course of trade,
without the consent of the trademark proprietor.
82
CHAPTER 3
Any Member State may also provide that the proprietor shall be
entitled to prevent all third parties not having his consent from using
in the course of trade any sign which is identical with, or similar to,
the trademark in relation to goods or services which are not similar
to those for which the trademark is registered, where the latter
has a reputation in the Member State and where use of that sign
without due cause takes unfair advantage of, or is detrimental to,
the distinctive character or the repute of the trademark.
83
TRADEMARKS: INFRINGEMENT
The differences between the subsections were dealt with in the two
judgments next quoted.
JOHNSTONE v R
[2003] UKHL 28 [UK]
Section 10(2) addresses cases where either (a) a sign identical with a
registered trademark is used in relation to goods similar to those for
which the trademark is registered or (b) a sign similar to a registered
trademark is used in relation to goods identical with or similar to
those for which the trademark is registered. In such cases user
constitutes infringement if there exists a likelihood of confusion on
the part of the public.
84
CHAPTER 3
Subsection (2) deals with use when the goods and/or the signs are
not identical. In those circumstances a likelihood of confusion must
be shown. That requires the proprietor to establish that there is a risk
that the public might believe that the goods in question came from
the same undertaking or an economically linked undertaking.
7. Identical marks: The definition of identity implies that the two elements
compared should be the same in all material respects. But in deciding
whether a mark and a sign are identical, the decision must be based on
the overall impression created by them, including their visual, aural and
conceptual similarities. The effect of this is that insignificant differences
must be ignored in making the comparison.103
103 See also Bayer Cropscience SA v Agropharm [2004] EWHC 1661 [UK].
85
TRADEMARKS: INFRINGEMENT
There is therefore identity between the sign and the trademark where
the former reproduces, without any modification or addition, all the
elements constituting the latter.
Since the perception of identity between the sign and the trademark
is not the result of a direct comparison of all the characteristics of the
elements compared, insignificant differences between the sign and
the trademark may go unnoticed by an average consumer.104
104 For a critical analysis of the ECJ judgment see Reed Executive plc v. Reed Business Information Ltd [2004] EWCA (Civ) 159
[UK]. This judgment held that “Reed Business Information” was not identical to the trademark “Reed”. The same applies
to “Compass” and “Compass Logistics”: Compass Publishing v Compass Logistics 2004 EWHC 520[UK].
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to his mark under Article 5(1)(a) of the directive only if the following
four conditions are satisfied:
105 The subsequent appeal was dismissed: ECJ, 7 May 2009, Waterford Wedgwood / Assembled Investments (Proprietary)
and OHIM, C-398/07 P, ECR 2009. I-75.
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The parties do not dispute that the goods at issue, namely the
articles of glassware, on the one hand, and, on the other hand, the
wine, are distinct by nature and by their use, that they are neither
in competition with one another nor substitutable and that they are
not produced in the same areas.
In that regard, the first point to make is that, in so far as eBay used
keywords corresponding to L’Oréal trade marks to promote its own
service of making an online marketplace available to sellers and
buyers of products, that use was not made in relation to either (i)
goods or services “identical with those for which the trade mark is
registered” or (ii) goods or services similar to those for which the
trade mark is registered.
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This inquiry may take into account how those in trade classify goods,
for instance whether market research companies, who of course act
for industry, put the goods or services in the same or different sectors.
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The fact that certain goods may fall within the same class is not
evidence that they are “of the same description”. Further, it has
been held that the use of a mark registered for flour on a loaf of
bread is not use of the mark in relation to flour (since flour, as such,
is no longer present in the loaf of bread).
13. Classes: Goods and services are registered in classes in terms of the
Nice Classification.106 The Nice Agreement Concerning the International
Classification of Goods and Services for the Purposes of the Registration
of Marks (1957) established a classification of goods and services for the
purposes of registering trademarks. The classification consists of a list of
classes—there are thirty-four classes for goods and eleven for services—and
an alphabetical list of goods and services. The latter comprises some 11 000
items. Both lists are, from time to time, amended and supplemented by a
committee of experts.
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Class 36: Insurance; financial affairs, monetary affairs; real estate affairs.
Under the Trademarks Acts goods and services are divided into
a series of classes. The main purpose of the classes is to enable
trademark searching to be carried out. For instance if you have a
new mark for a medicine then you search the relevant class, class
5. The schedule itemizes a variety of goods in various classes and
classes of services. The classification forms part of an internationally
agreed system and is known as the Nice Classification, following the
1934 international conference which took place there. It is widely
(indeed I believe universally) used by trademark registries throughout
the world and by the so-called “international” system [regulated by]
the Madrid Agreement [and the Madrid] Protocol. The classification
could not and does not explicitly mention all types of goods and
services in detail. But there is a very large and comprehensive list of
goods and services by which the Registrar goes. His judgment on
where goods go is, for administrative reasons, made final. This list is
used internationally and is amended from time to time, normally to
deal with new kinds of goods or services. Occasionally a particular
kind of article or service is moved from one class to another.
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14. Service marks: Trademarks for services are of a relatively recent origin
and an obligation to provide for them arises not only from TRIPS but also
from the Trademark Law Treaty (1994) and the Singapore Treaty on the
Law of Trademarks. Initially, trademarks could only be registered for goods.
There are, accordingly, very few judgments dealing with service marks but
since the principles are the same it does not really matter.
The Indian Trademarks Act defines a service as one of any description which
is made available to potential users and includes the provision of services
in connection with business of any industrial or commercial matters such
as banking, communication, education, financing, insurance, chit funds,
real estate, transport, storage, material treatment, processing, supply of
electrical or other energy, boarding, lodging, entertainment, amusement,
construction, repair, conveying of news or information and advertising.
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JOHNSTONE v R
[2003] UKHL 28 [UK]
107 Cf Anheuser Busch Inc v Budweiser Budvar National Corp [2002] NZCA 264 (CA) [New Zealand].
108 The Nigerian Trademarks Act is explicit because there a trademark is deemed to be infringed by any person who uses a
mark identical with it or so nearly resembling it as to be likely to deceive or cause confusion, in the course of trade, in
such manner as to render the use of the mark likely to be taken as being use as a trademark.
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Applying the principles laid down by the ECJ in the following quotation, the
Finnish Supreme Court found that the defendant did not infringe Gillette’s
trademark. The court held that the inclusion of such a reference in the
packaging was necessary to indicate the intended purpose of the product
and the reference was made in accordance with honest practices.109
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The fact that a third party uses a trademark of which it is not the
owner in order to indicate the intended purpose of the product
which it markets does not necessarily mean that it is presenting it
as being of the same quality as, or having equivalent properties to,
those of the product bearing the trademark. Whether there has
been such presentation, depends on the facts of the case.
Whether the product marketed by the third party has been presented
as being of the same quality as, or having equivalent properties to, the
product whose trademark is being used is a factor which the referring
court must take into consideration when it verifies that that use is made
in accordance with honest practices in industrial or commercial matters.
The case concerned the use of the registered trademark BOSTON MARATHON
by a television station in connection with its coverage of the event. The Court
found that the US statutory fair use defense was properly asserted, reasoning
that the trademark was used primarily in a descriptive manner. Because of
the “timing, meaning, context, intent, and surrounding circumstances”, the
court found that there was not a likelihood of confusion.
HÖLTERSHOFF v FREIESLEBEN
ECJ, 14 May 2002, C-2/00, ECR 2002, I-4187
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jewelry respectively, and the defendant, concerning the latter’s use of those
trademarks for descriptive purposes in the course of trade.
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I accept the defendants’ submission that they were not using the
“Bibendum” design as a trademark to indicate that Michelin was
the source of the pamphlets and leaflets. The defendants did not
use the “Bibendum” design as a trademark but as a campaign tool
to attract the attention of Michelin employees as they entered the
factory gates. There could be no mistake that the CAW was the
originator of the pamphlets and leaflets. CAW was not using the
“Bibendum” to identify with Michelin’s wares and services. Rather,
the “Bibendum” was depicted to draw the eyes of the Michelin
employees and stand in contrast to the usual corporate image.
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By contrast, where the relevant section of the public views the sign
purely as an embellishment, it necessarily does not establish any link
with a registered mark. That therefore means that the degree of
similarity between the sign and the mark is not sufficient for such a
link to be established.
The answer must therefore be that the fact that a sign is viewed
as an embellishment by the relevant section of the public is not, in
itself, an obstacle to the protection conferred where the degree of
similarity is none the less such that the relevant section of the public
establishes a link between the sign and the mark. By contrast,
where the relevant section of the public views the sign purely as
an embellishment, it necessarily does not establish any link with a
registered mark, with the result that one of the conditions of the
protection conferred is then not satisfied.
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garments and were not used for sale “for the purpose of distinguishing”
them from the wares of others. As a result, he concluded that the
respondent’s crest design had not been used as a trade-mark.
20. The exclusive right is conferred in order to ensure that the trademark
can fulfill its function as a badge or origin:
Arsenal is the internationally known football club known as Arsenal or the Gunners.
Part of its business involves the sale of products bearing the words Arsenal,
Arsenal Gunners and device marks for which it holds trademark registrations.
Reed is a football merchandise business selling also souvenirs and memorabilia
bearing the mentioned trademarks. The case against him was based on primary
infringement. His defense was that that he used the word Arsenal and other
trademarks as badges of allegiance and not as a badge of origin.
111 Fox The Canadian Law of Trademarks and Unfair Competition (3 ed. Toronto: Carswell, 1972). Fox, in turn, relied heavily
on Nicholson & Sons, Ld (1931) 48 RPC 227 (Ch) 260.
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acting without his consent, from using in the course of trade any sign
which is identical to the trademark in relation to goods or services
which are identical to those for which the trademark is registered.
For the trademark to be able to fulfill its essential role in the system of
undistorted competition it must offer a guarantee that all the goods
or services bearing it have been manufactured or supplied under the
control of a single undertaking which is responsible for their quality.
The preamble to the Directive [cf Art. 16.1 of TRIPS] points out the
absolute nature of the protection afforded by the trademark in the case
of identity between the mark and the sign and between the goods or
services concerned and those for which the mark is registered. It follows
that the exclusive right was conferred in order to enable the trademark
proprietor to protect his specific interests as proprietor, that is, to ensure
that the trademark can fulfill its functions.
The case was referred back to the national court, which eventually found
against Reed.112
112 Arsenal Football Club v Reed [2003] EWCA 696 [UK]. See for a different aspect of trademark use: The Rugby Football
Union v Cotton Traders Ltd [2002] EWHC 467 [UK]; SA Football Association v Stanton Woodrush (Pty) Ltd [2002] ZASCA
142 [South Africa].
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R v JOHNSTONE
[2003] UKHL 28 [UK]
22. The added matter fallacy: Once the defendant’s mark has been
identified it is impermissible to denude it by removing all additional material
that differentiates it from the plaintiff’s trademark, thereby bringing it closer
to the latter. The “added matter” doctrine does not permit a-contextual
examination of the accused sign because it is highly artificial to compare
the accused mark through the eyes of the average consumer without
considering what impact the overall use of the sign “in context” would have
upon him.114 In this regard it is necessary to place the following dictum taken
from the case next quoted in context, namely that –
113 Apple Corps Ltd v Apple Computer Inc [2006] EWHC 996 [UK].
114 Paraphrasing O2 Holdings Ltd v Hutchison 3G Ltd [2006] EWHC 534 (Ch).
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The issue can be illustrated with reference to the facts of The Polo/Lauren
Co LP v Shop In Department Store Pte Ltd [2005] SGHC 175, [2005] 4 SLR
816 (Singapore High Court). The oft litigated registered trademark “Polo”
for clothing was in issue. The question was whether it was infringed by
the mark “Polo Pacific”. The court rejected the argument that the word
“Pacific” should be regarded as added matter under the Saville dictum and
did not compare “Polo” with “Polo” but rather “Polo Pacific” with “Polo”.
Likewise, 10 Royal Berkshire Polo Club Trademark [2001] RPC 32 held that
the mark “10 Royal Berkshire Polo Club” was not identical or confusingly
similar to “Polo”. On the other hand, Polo Textile Industries Pty Ltd v
Domestic Textile Corporation Pty Ltd (1993) 42 FCR 227, (1993) 26 IPR 246
held that “Polo Club” infringed “Polo”. The legal principle appears from
this extract:
The facts of the following case illustrate the principle further. The senior
mark, TREAT, was registered for dessert sauces and syrups in Class 30. The
defendant produced a toffee-flavored spread. The key wording on the label
was “Robertson’s Toffee Treat” coupled with a description “Irresistibly rich
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In Origins Natural Resources Inc v Origin Clothing Ltd [1995] FSR 280,
I said that s. 10:
One still has to identify the defendant’s sign for the purposes of the
comparison. In most cases there can be no difficulty. It is either there
or not. However it is possible for the sign to be hidden or swamped.
No-one but a crossword fanatic, for instance, would say that “treat”
is present in “theatre atmosphere”. There is no question of this sort
here, however. “Treat” is there on the Robertson products for all to
see. Whether it is used as a trademark is quite another matter.
I am not persuaded that any of this establishes that the phrase was
ever thought to be a trademark in its own right.
G. NOTIONAL USE
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In certain of the decided cases it has been held that the court should
include in its comparison what has been termed the “notional use” of
the registered mark and of the alleged infringing mark, which means
that in making the necessary comparison the court is not confined to
the manner in which the parties have actually used their respective
marks: it may have regard to how they can use the marks in a fair and
normal manner. I can well see that in considering the question of
infringement the court should have regard not only to the plaintiff’s
actual use of his registered mark, but also to notional use, that is to
all possible fair and normal applications of the mark within the ambit
of the monopoly created by the terms of the registration. I have
some difficulty, however, in applying the notional user approach to
the use by the defendant of his mark, especially as regards the type
of goods to which the mark is applied.
105
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CONFUSION
CHAPTER IV
I
107
TRADEMARKS: CONFUSION
there exists a likelihood of confusion on the part of the public, which includes
the likelihood of association with the trademark.115
115 ECJ, 18 December 2008, Éditions Albert René / OHIM (Obelix / Mobelix), C-16/06 P, ECR 2008, I-10053.
116 Cadila Health Care Ltd Cadila Pharmaceuticals Ltd AIR 2001 SC 1952 [India]; Boswell-Wilkie Circus v Brian Boswell Circus
1984 (1) SA 734 (N) [South Africa].
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The concept [of the likelihood of association] itself comes from article
4(1)(b) of the [EC] Directive and apparently derived from Benelux case
law. In the case of Union v Union Soleure (1984) BIE 137 it was stated:
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117 Barton Beebe Search and Persuasion in Trademark Law [103] Michigan Law Review 2020.
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The test of likelihood of deception or confusion does not require that all
persons in the market are likely to be deceived or confused. But it is not
sufficient that someone in the market is likely to be deceived or confused. A
balance has to be struck. Terms such as ‘a number of people’, ‘a substantial
number of people’, ‘any considerable section of the public’, and ‘any
significant number of such purchasers’ have been used. As Cooke J put it:
C. GLOBAL APPRECIATION
This does not mean that the dominant feature of a trademark does not play
a role in determining the likelihood of confusion. On the contrary, it plays
an important part.
118 Joseph Schlitz Brewing Co v Houston Ice And Brewing Co 250 US 28 (1919) per Holmes J.
119 Grandpa Pidgeon’s of Missouri Inc v Borgsmiller 447 F2d 586.
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In that perspective, the more distinctive the earlier mark, the greater
will be the likelihood of confusion.
Phonetic similarity exists when there are similar roots and termination
and when the tonic syllable of the two names is identical or very
difficult to distinguish. It must be added that in order to establish
the existence of a potential confusion, the particulars of each case
must be taken into account.
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avoid confusing the consumers and protect the exclusive use right
of the trademark’s owner in advance.
MGM applied for the registration of the word trademark CANNON to be used
in respect of films recorded on videotape cassettes (video film cassettes). CKK
opposed that application on the ground that it would infringe its earlier word
trademark CANON, registered in respect of still and motion picture cameras
and projectors. The national court had found that although CANNON
and CANON are pronounced in the same way and the mark CANON has
a reputation, the public perception is that ‘films recorded on video tape
cassettes (video film cassettes)’ and ‘recording and reproduction devices for
video tapes (video recorders)’ do not come from the same manufacturer,
which meant that the two marks could exists alongside each other.120 The
judgment of the ECJ in effect upheld the correctness of the finding.
Furthermore the more distinctive the earlier mark, the greater the
risk of confusion. Since protection of a trademark depends on
there being a likelihood of confusion, marks with a highly distinctive
character, either per se or because of the reputation they possess
on the market, enjoy broader protection than marks with a less
distinctive character.
120 This is a factual finding and the perception may differ from jurisdiction to jurisdiction and from time to time.
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TRADEMARKS: CONFUSION
Accordingly, the risk that the public might believe that the goods
or services in question come from the same undertaking or, as the
case may be, from economically-linked undertakings, constitutes a
likelihood of confusion. Consequently, in order to demonstrate that
there is no likelihood of confusion, it is not sufficient to show simply
that there is no likelihood of the public being confused as to the
place of production of the goods or services.
11. The classic common-law test: The following test has been applied in
numerous cases.121
You must take the two words [or marks]. You must judge of them,
both by their look and by their sound. You must consider the goods
to which they are to be applied. You must consider the nature and
kind of customer who would be likely to buy those goods. In fact,
you must consider all the surrounding circumstances; and you must
further consider what is likely to happen if each of those trademarks is
used in a normal way as a trademark for the goods of the respective
owners of the marks. If, considering all those circumstances, you come
to the conclusion that there will be a confusion— that is to say, not
necessarily that one man will be injured and the other will gain illicit
benefit, but that there will be a confusion in the mind of the public
which will lead to confusion in the goods—then you may refuse the
registration, or rather you must refuse the registration in that case.
12. Diverging opinion on the global assessment test: Not all jurisdictions are
comfortable with the global appreciation approach because it may not fit in
with their legislative scheme.
There are two reasons why I reject the global assessment test. First,
the global assessment test is not in pari materia with our legislation
and, in fact, confuses the elements of infringement required under
s 27(2) (b) of the TMA. It is clear from the plain words of s 27(2)
(b) that the likelihood of confusion, if any, must be the direct result
121 Eg Cooper Engineering Co Pty Ltd v Sigmund Pumps Ltd (1952) 86 CLR 536 (HCA) [Australia]. The respondent’s goods
were goods of the same description (irrigation equipment) as the appellant’s goods, and the sole question was whether
the word RAINMASTER so resembled the word RAIN KING as to be likely to deceive. The Court found that there was no
such likelihood. See also Pepsico Inc v Hindustan Coca Cola 2001 PTC 699 [India].
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122 It is debatable whether the Court’s understanding of the global appreciation test as reflected in these two sentences was
correct.
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TRADEMARKS: CONFUSION
We have had the benefit of written reasons from the Registrar [of
Trademarks] and argument from counsel. We have had ample time
for full consideration and close comparison of the two trademarks.
These advantages, however, carry their own dangers. They have
caused us to look at the trademarks with far greater care than they
would be looked at by the members of the public whose probable
reactions we are required to assess, and with a far keener awareness
of similarities and dissimilarities than such people would probably
have as they go about their daily lives.
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14. Highly distinctive marks have wider protection than those that have a
lesser degree of distinctiveness:
123 Suzy A Frankel A tale of confusion: how tribunals treat the presence and absence of evidence of actual confusion in trade
mark matters [2001] VUWLRev 5.
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TRADEMARKS: CONFUSION
hurried consumer ‘in all the circumstances’ include, but are not limited
to, those enumerated in s. 6(5) of the Act. These are:
Over the years the courts have identified a number of factors to aid
in determining likelihood of confusion in non-competing products
cases. Those factors are:
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17. The effect of the dominant features of the marks on the assessment:
The comparison must be made with reference to the sense, sound and
appearance of the marks. The marks must be viewed as they would
be encountered in the market place and against the background of
relevant surrounding circumstances. The marks must not only be
considered side by side, but also separately. It must be borne in
mind that the ordinary purchaser may encounter goods, bearing the
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TRADEMARKS: CONFUSION
124 See also Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407(HC).
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20. The relative value of the factors: The relative value of sight, sound and
meaning is well explained by the authors Pattishall, Hilliard and Welch:125
It should again be stressed that these matters are not judged in isolation.
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TRADEMARKS: CONFUSION
F. VISUAL SIMILARITY
The appellant sold a distinctive chocolate biscuit under its registered trademark
ROMANY CREAMS. The respondent sold chocolate biscuits bearing a
striking resemblance under the mark ROMANTIC DREAMS. The issue was
whether the respondent’s use of the mark ROMANTIC DREAMS infringed
the trademark ROMANY CREAMS. The dispute was confined to whether
the respondent’s mark so nearly resembles the registered trademark as to be
likely to cause confusion. The court held that there was no infringement.
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G. SIMILARITY IN SOUND
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TRADEMARKS: CONFUSION
It is the judicial ear that is decisive, but the conclusion has to be based
upon all the surrounding circumstances. The defendant submitted
that VICROM would be pronounced ‘vic-rom’. There is no evidence
to support that suggestion and I conclude that the submission cannot
succeed. At the very least most people would pronounce it ‘vi-crom’.
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23. Degree of similarity of goods or services. The more similar the goods
or services covered and the more distinctive the earlier mark, the greater will
be the likelihood of confusion.
The question was whether the junior mark, LOINT’S, was confusingly similar
to the senior mark, LLOYD, both for shoes.
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It is well known that the question whether the two marks are likely to
give rise to confusion or not is a question of first impression. It is for
the court to decide that question. English cases proceeding on the
English way of pronouncing an English word by Englishmen, which it
may be stated is not always the same, may not be of much assistance
in our country in deciding questions of phonetic similarity. It cannot
be overlooked that the word is an English word which to the mass
of the Indian people is a foreign word. It is well recognized that in
deciding a question of similarity between two marks, the marks have
to be considered as a whole.
Much was made of the fact that ALBEX and ALL BLAX are pronounced
differently. In analyzing this submission it is important to bear in
mind that the South African society is a multi-cultural one where
many languages are spoken, and where many dialects of the same
languages exist, each with its own peculiar accent. It is therefore
of little assistance to consider how a person with a colonial English
accent will pronounce the word without taking into consideration
the various pronunciations which are encountered in this country.
In view of the ever-changing demographics of our society, the
differences in pronunciation should not be confined to a comparison
between Cape vernacular and the so-called standard pronunciation.
In this case one only has to repeat the respective marks to hear that
there is a definite similarity, and that in considering the sound of
the words, one must visualize conversations between people who
do not necessarily articulate clearly and carefully, but have a natural
tendency particularly because of language differences, to pronounce
the words differently.
H. CONCEPTUAL SIMILARITY
25. Association is not enough: The fact that two marks are conceptually
similar is not sufficient to give rise to a likelihood of confusion
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The question was the extent to which a conceptual similarity can determine
whether there is a likelihood of confusion. Puma’s mark was the senior
mark. The Court did not answer the factual question.
However, where the earlier mark is not especially well known to the
public and consists of an image with little imaginative content, the
mere fact that the two marks are conceptually similar is not sufficient
to give rise to a likelihood of confusion.
ZWILLING v ZWEIBRÜDER
BGH, Urt. v. 29 April 2004 - I ZR 191/01 [Germany]
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The aural aspect was not dealt with by the court a quo in so many
words as a separate inquiry. What has to be compared is then
DAIRYBELL on the one hand with COWBELL on the other. Since
the suffix ‘-le’ in DAIRYBELLE is muted it may be of no audible
consequence to the consumer who is unaware that the word as
pronounced can refer to a dairymaid. The words ‘dairy’ and ‘cow’
bear no auditory relationship to one another. The emphasis in the
respondent’s mark is on the first part, which form the dominant parts
of the word. ‘Dairy’ [is a] two-syllable word, whereas ‘cow’ consists
of one syllable. DAIRYBELLE represents [an] unusual combinations
of words and [is] in a sense [an] invented word, whereas COWBELL
is an ordinary word bearing an ordinary connotation. Since the
respondent did not submit that confusion or deception is likely in
this context, it is unnecessary to belabour my conclusion that there
is no such likelihood.
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TRADEMARKS: CONFUSION
126 Cadbury-Schweppes Pty Ltd v The Pub Squash Co Ltd [1981] RPC 429 (PC) [UK].
127 McCarthy on Trademarks and Unfair Competition (4 ed) par 13.22 quoted with approval in Advantage Group Ltd v ADV
E-Commerce Ltd [2002] NZCA 282 (CA) [New Zealand].
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RECKITT & COLMAN SA (PTY) LTD v S C JOHNSON & SON SA (PTY) LTD
1993 (2) SA 307 (A) [South Africa]
133
TRADEMARKS: CONFUSION
GE TRADE MARK
[1973] RPC 297 (HL) [UK]
My Lords, where goods are of a kind which are not normally sold to
the general public for consumption or domestic use but are sold in
a specialized market consisting of persons engaged in a particular
trade, evidence of persons accustomed to dealing in that market as
to the likelihood of deception or confusion is essential. A judge,
though he must use his common sense in assessing the credibility
and probative value of that evidence is not entitled to supplement
any deficiency in evidence of this kind by giving effect to his own
subjective view as to whether or not he himself would be likely to be
deceived or confused.
128 As quoted in Playboy Enterprises v Bharat Malik 2001 PTC 328 [India].
129 The Upjohn Co v Merck 1987 (3) SA 221 (T) [South Africa].
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29. Evidence of actual confusion and expert and survey evidence: Evidence
of actual confusion (e.g., misdirected enquiries, complaints or mail) is
valuable but seldom available. Evidence of the condition of the trade,
especially if one is dealing with a specialist market, may be important.
Survey evidence raises two questions: the problem of getting the evidence
before the court (the problem of admissibility); and the problem of the value
of the survey, having regard to the way in which it was conducted (the
problem of weight). As far as admissibility is concerned, it is now generally
accepted that the results of a properly conducted survey are admissible
(sometimes under statutory exceptions to the hearsay rule).131 As far as weight
is concerned, courts have sometimes tended to approach the evidence with
a degree of skepticism:
130 Reckitt & Colman SA (Pty) Ltd V S C Johnson & Son SA (Pty) Ltd 1993 (2) SA 307 (A) [South Africa].
131 Eg New Zealand: Customglass Boats Ltd v Salthouse Brothers Ltd [1976] RPC 589; England: GE Trademark Case [1969
RPC] 418 (Ch); [1970] RPC 339 (CA) and [1973] RPC 297 (HL); Stringfellow v McCain Foods (GB) Ltd [1984] RPC 501 (Ch
D and CA); South Africa: McDonald’s Corporation v Joburgers Drive-Inn Restaurant (Pty) Ltd 1997 (1) SA 1 (A).
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TRADEMARKS: CONFUSION
If a survey is to have any value the questions should be fair, and they should
be so formulated as to preclude a weighted or conditioned response.132
132 Hoechst Pharmaceuticals (Pty) Ltd v Beauty Box (Pty) Ltd (In Liq) 1987 (2) SA 600 (A) [South Africa].
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TRADEMARKS:
WELL-KNOWN TRADEMARKS
CHAPTER V
A. INTRODUCTION (1)
137
TRADEMARKS: WELL-KNOWN TRADEMARKS
A. INTRODUCTION
1. The scope of this chapter: There are two types of legal protection for
well-known trademarks:133
■■ a reproduction,
■■ an imitation, or
■■ a translation,
133 Cf. WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks 1999.
134 “The countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to
refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation,
or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration
or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention
and used for identical or similar goods. These provisions shall also apply when the essential part of the mark constitutes
a reproduction of any such well-known mark or an imitation liable to create confusion therewith.”
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is against use for goods that are similar or identical to those of the claimant.
In order to eliminate the limitation, Art. 16.2 of TRIPS provides that the
Art. 6bis protection must also be available in respect of service marks and not
only to goods marks, and that it must also apply to certain dissimilar goods
or services, namely (Art. 16.3) –
■■ The owner of the foreign trademark must have a real and effective
industrial or commercial establishment in a Convention country.
■■ A sector of the population must be “interested in the goods or
services to which the mark relates”.
■■ The mark must be well known within the local jurisdiction as
a trademark belonging to an enterprise with a base in another
country.
■■ A substantial number of people must have the requisite knowledge.
■■ The local mark must constitute a reproduction, an imitation, or a
translation of the foreign trademark.
■■ The local trademark must cause confusion.
135 Wang Yan Fang The protection of the well-known trademark chinaiprlaw.com/english/.
139
TRADEMARKS: WELL-KNOWN TRADEMARKS
I now turn to consider whether the respondent [The Gap Inc] has
made out a case for this kind of protection. Starting at the beginning,
the introductory phrase of s 35(3) [of the South African Act], namely,
“the proprietor of a trademark which is entitled to protection under
[art 6bis of] the Paris Convention” requires that, in order to be able
to obtain the protection provided for in s 35(3), the foreign owner
has to be a “qualified” person in terms of s 35(1). It is common
cause that since the respondent has a “real and effective industrial or
commercial establishment in a convention country”, this requirement
has been met. Another requirement is that the claimant has to be
the “proprietor” of the relevant well-known trademark in its home
territory, something not disputed.
The question then is whether the respondent’s GAP marks are (or
were) well known in South Africa and, if so, since when. This raises
a number of interrelated questions which were identified during the
course of E M Grosskopf JA’s judgment in McDonald’s.
Next is whether the mark is well known within the local jurisdiction
as a trademark belonging to an enterprise with a base in another
country (although the knowledge does not have to include the fact
that the country is a convention country).
140
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The last issue is the determination of whether those who have the requisite
knowledge represent a substantial number of the chosen universe.
7. The required knowledge: The TRIPS Agreement, Art. 16.2, gives part
of the answer:
136 The US Federal Trademark Dilution Act has a similar non-exclusive list of factors.
141
TRADEMARKS: WELL-KNOWN TRADEMARKS
■■ that the mark has been used in, or that the mark has been
registered or that an application for registration of the mark has
been filed in or in respect of, the Member State;
■■ that the mark is well known in, or that the mark has been
142
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10. The relevant sector of the public: Article 16.2 of the TRIPS Agreement
deals with the concept of “relevant sector” of the public:
143
TRADEMARKS: WELL-KNOWN TRADEMARKS
The answer to [the] question [whether the mark must be well known
to all sectors of the population] is, I think, clear. [The section] was
intended to provide a practical solution to the problems of foreign
businessmen whose marks were known in South Africa but who did
not have a business here.
The next question then is: how well should it be known to such
persons? In the present context the important practical question is
144
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not whether a few people know the mark well but rather whether
sufficient persons know it well enough to entitle it to protection
against deception or confusion.
C. TRADEMARK DILUTION
Any Member State may also provide that the proprietor shall be
entitled to prevent all third parties not having his consent from using
in the course of trade any sign which is identical with, or similar to,
the trademark in relation to goods or services which are not similar
to those for which the trademark is registered, where the latter
has a reputation in the Member State and where use of that sign
145
TRADEMARKS: WELL-KNOWN TRADEMARKS
L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
The Act defines “dilution” as “the lessening of the capacity of a famous mark to
identify and distinguish goods or services regardless of the presence or absence
of competition between the owner of the famous mark and other parties or
the likelihood of confusion, mistake, or deception. It also sets out a number
of specific defenses, namely fair use of a famous mark by another person in
comparative commercial advertising or promotion to identify the competing
goods or services of the owner of the famous mark; non-commercial use of a
mark; and all forms of news reporting and news commentary.
137 ECJ, 9 January 2003, Davidoff / Gofkid, C-292/00, ECR 2003, I-389.
146
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The basic principle is that a trader may not take unfair advantage of
the trademark of another. This can be done in a number of ways. The
principal method is by diluting the trademark through blurring or tarnishing.
Confusion is not required. However, as appears from this judgment, courts
are wary of granting relief under this heading. The judgment also quoted
Professor J.T. McCarthy who said:
148
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L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
This approach has not found favor with English courts in the follow-up
judgment in L’Oreal SA v Bellure NV [2010] EWCA Civ 535 when it said this:
149
TRADEMARKS: WELL-KNOWN TRADEMARKS
In Dimple [1985] GRUR 550, the German Federal Supreme Court said
that:
This sort of detriment has been generically described as “dilution”, and has
also been said to occur normally in one of two ways, namely by “blurring”
or by “tarnishing”.
150
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L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
The instant case is, however, not concerned with blurring but rather
with tarnishment. FW Mostert [Famous and Well-Known Marks (2
ed) 1-103] quotes another German case to illustrate: the owner of the
well-known perfume “4711” was able to interdict a sewer company
from using the number on a malodorous tank truck even though
the number only formed part of its telephone number. Courts in
different jurisdictions have come to similar conclusions on similar
facts in this regard. For instance, the use of the American Express
charge card and the slogan “Don’t leave home without it” in relation
to condoms was not acceptable to a US court [American Express Co
v Vibra Approved Laboratories Corp 10 USPQ 2d 2006 (SDNY 1989)].
In G e r m a n y, the Federal Supreme Court found that the use of
the confectionary trademark Mars and its slogan that it will liven you
up in relation to a gag item consisting of a condom, tarnished Mars
[Case I ZR 79/92, 1995 [26] IIC 282]. And in England an attempt
to register Visa as a trademark, also in relation to condoms, was
dismissed on the same ground [A Sheimer (M) SDN BHD’s Trademark
Application [2000] RPC 13 (p 484)].
18. Parody:
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I must also be satisfied that there is a prima facie case that the
defenders’ use of the sign would take unfair advantage of the
distinctive character or repute of the pursuers’ trademark. Not
only must this advantage be unfair, but it must be of a sufficiently
significant degree to warrant restraining what is, ex hypothesi, a non-
confusing use. It is worthy of note that there is a general reluctance
to apply these provisions too widely.
In Pfizer Limited v Eurofood Link (UK) Ltd [2000] ETMR 896 Mr Simon
Thorley QC observed that,
153
TRADEMARKS: WELL-KNOWN TRADEMARKS
The standard of proof was expressed differently in these terms by the ECJ in
the TDK judgment:
140 Moseley dba Victor’s Little Secret v V Secret Catalogue Inc 123 S Ct 1115; 65 USPQ 2d 1801.
154
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155
156
TRADEMARKS:
DEFENSES
CHAPTER VI
157
TRADEMARKS: DEFENSES
141 Hotel Cipriani Srl v Cipriani (Grosvenor Street) Ltd [2010] EWCA Civ 110 (24 February 2010).
158
CHAPTER 6
4. Fair use: US law makes express provision for a fair use defense where:142
The object of the fair use defense is to prevent a trademark owner from
monopolizing or appropriating a descriptive word or phrase since everyone
is free to use a term in its primary, descriptive sense so long as such use does
not lead to customer confusion as to the source of the goods or services.143 In
the earlier discussion reference was made to trademark use as a requirement
of trademark infringement. This fair use defense does not differ in principle
from that requirement.
159
TRADEMARKS: DEFENSES
Nominative fair use is said to occur when the alleged infringer uses
the [trademark holder’s] product, even if the alleged infringer’s
ultimate goal is to describe his own product. Nominative fair use
also occurs if the only practical way to refer to something is to use
the trademarked term. By contrast, classic fair use occurs where
the defendant uses the plaintiff’s mark to describe the defendant’s
own product.
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■■ it is not misleading;
■■ it compares goods or services meeting the same needs or
intended for the same purpose;
■■ it objectively compares one or more material, relevant, verifiable
and representative features of those goods and services, which
may include price;
■■ it does not create confusion in the market place between
the advertiser and a competitor or between the advertiser’s
trademarks, trade names, other distinguishing marks, goods or
services and those of a competitor;
■■ it does not discredit or denigrate the trademarks, trade names,
other distinguishing marks, goods, services, activities, or
circumstances of a competitor;
■■ for products with designation of origin, it relates in each case to
products with the same designation;
■■ it does not take unfair advantage of the reputation of a trademark,
trade name or other distinguishing marks of a competitor or of
the designation of origin of competing products;
■■ it does not present goods or services as imitations or replicas of
goods or services bearing a protected trademark or trade name.
145 Directive 84/450 concerning misleading and comparative advertising, as amended by Directives 97/55 and 2005/29,
available at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1984L0450:20050612:EN:PDF
161
TRADEMARKS: DEFENSES
SIEMENS AG v VIPA
ECJ, 23 February 2006, C-59/05, ECR 2006, I-2147:
L’ORÉAL SA v BELLURE NV
ECJ, 18 June 2009, C-487/07, ECR 2009, I-5185
162
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L’OREAL SA v BELLURE NV
[2010] EWCA Civ 535
The problem, stated at its most general, is simple. Does trade mark
law prevent the defendants from telling the truth? Even though their
perfumes are lawful and do smell like the corresponding famous
brands, does trade mark law nonetheless muzzle the defendants so
that they cannot say so?
I have come to the conclusion that the ECJ’s ruling is that the
defendants are indeed muzzled.
My own strong predilection, free from the opinion of the ECJ, would
be to hold that trade mark law did not prevent traders from making
honest statements about their products where those products are
themselves lawful.
163
164
COPYRIGHT:
INTRODUCTION
CHAPTER VII
D. TRIPS (12-14)
165
COPYRIGHT: INTRODUCTION
166
CHAPTER 7
147 Quoted in Creative Technology Ltd v Aztech Systems Pte Ltd v Aztech Systems Pte Ltd [1997] FSR 491 (CA) [Singapore].
The buyer’s freedom to resell a copy of certain works is expressly regulated in that the right of distribution is granted only
for the first sale by, or with the authorization of, the right owner, not in relation to subsequent sales of the copies sold.
148 Crosstown Music Company 1,LLC v Rive Droite Music Ltd & Ors [2010] EWCA Civ 1222.
167
COPYRIGHT: INTRODUCTION
upon the owner of copyright in a literary work, the right to publish it.
The Act gives the owner of the copyright the right to prevent others
from doing that which the Act recognizes the owner alone has a
right to do. It prevents all, save the owner of the copyright, from
expressing information in the form of the literary work protected by
the copyright.
The right to prevent someone from doing what is the author’s exclusive right
is the reverse side of the positive right. There is also a difference between the
right to reproduce and the right to publish (although they may overlap) – the
former is the subject of copyright; the latter not.
This view is reflected in the common-law world in, for instance, the Canadian
and South African laws. The former defines copyright, in relation to a work,
as the sole right to produce or reproduce the work or any substantial part
thereof in any material form whatever, to perform the work or any substantial
part thereof in public or, if the work is unpublished, to publish the work or
any substantial part thereof. The South African Act, similarly, provides that
“copyright in a literary or musical work vests the exclusive right to do or
to authorize the doing of any of the [listed] acts in the Republic [such as]
reproducing the work in any manner or form.”
The civil-law is no different. The Copyright Act of the Netherlands, for one,
states that copyright is the exclusive right of the author of a literary, scientific or
artistic work to communicate that work to the public and to reproduce it (s 1).
168
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149 Taken from the WIPO website where the Treaties that follow appear: http://www.wipo.int/treaties/en/.
169
COPYRIGHT: INTRODUCTION
■■ translate,
■■ make adaptations and arrangements of the work,
■■ perform in public dramatic, dramatico-musical and musical works,
■■ recite in public literary works,
■■ communicate to the public the performance of such works,
■■ broadcast,
■■ make reproductions in any manner or form,
■■ use the work as a basis for an audiovisual work, and
■■ reproduce, distribute, perform in public or communicate to the
public that audiovisual work.
The Berne Convention does not extend copyright protection to news of the
day or to miscellaneous facts having the character of mere items of press
information (Art. 2(8)).
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The Berne Convention also permits countries to provide for a limited number
of exceptions to the general obligation to provide copyright protection for
the listed works. For instance, it is possible to exclude, wholly or in part,
political speeches and speeches delivered in the course of legal proceedings
from copyright protection.
9. The subject matter of the Treaty: The Treaty in a sense duplicates the
provisions of the TRIPS Agreement by incorporating by reference all the
substantive provisions of the Berne Convention and by introducing two new
subject matters, which are to be protected by copyright, namely:
150 WIPO Publication No.489 Ch 5 International Treaties and Conventions on Intellectual Property http://www.wipo.int/
export/sites/www/about-ip/en/iprm/pdf/ch5.pdf.
171
COPYRIGHT: INTRODUCTION
In addition it set out to clarify existing norms and, where necessary, create
new norms to respond to the problems raised by digital technology, and
particularly by the Internet. This is referred to as the digital agenda.
The provisions of the WCT relating to the agenda cover the following issues:
10. Distribution, rental and communications rights: The Treaty also deals
in some detail with certain rights of specified authors (not only of authors
of computer programs or databases) and accords them three, namely a
distribution, rental and communications right.
These are all exclusive rights, and are subject to limitations and exceptions.
They are in addition to the right of reproduction in material form, and prohibit
downloading of an infringing file from the Internet and subsequently saving it.
172
CHAPTER 7
D. TRIPS
173
COPYRIGHT: INTRODUCTION
The Berne Convention has a similar provision but some countries have now
adopted a 70-year term while a 99- and a 100- year term are also to be found.
The provisions of the Universal Convention have not been made applicable
by TRIPS and it does not contain any provisions relevant to the present work.
F. RELATED RIGHTS
16. Related rights: Rights related to copyright are dealt with by conventions
other than the Berne Convention. These are listed but will not be discussed
separately because there is hardly any case law available and because they
do not create problems with interpretation or application.
151 Keiko Momii Partial Amendment of the Copyright Law and the Law concerning Exceptional Provisions of the Copyright
Law Required in Consequence of the Implementation of the Universal Copyright Convention: http://www.cric.or.jp/cric_e/
cuj/cuj00/cuj00_3.html.
174
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175
COPYRIGHT: INTRODUCTION
The provisions of the WPPT relating to the digital agenda cover the following
issues:
■■ certain definitions,
■■ rights applicable to storage and transmission of performances
and phonograms in digital systems,
■■ limitations on and exceptions to rights in a digital environment,
■■ technological measures of protection, and
■■ rights management information.
152 WIPO Publication No.489 Ch 5 International Treaties and Conventions on Intellectual Property http://www.wipo.int/
export/sites/www/about-ip/en/iprm/pdf/ch5.pdf
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G. STATUTORY INSTRUMENTS
21. Local laws: The underlying assumption of this work is that countries
have laws in place that comply with their international obligations imposed
by the TRIPS Agreement. Because of the similarity of copyright laws, no
particular statute will be used as the basis of the discussion.
22. Common-law countries. The first Copyright Act was the English Act
of Anne of 1709 (or 1710). Many amendments followed until the UK
Copyright Act of 1911 (1 & 2 Geo 5 ch 46). In the common-law countries
that formed part of the British Empire, copyright laws were primarily based
on this Act, which applied directly or by adoption.154 The Act was replaced
by the 1956 UK Copyright Act (4 & 5 Eliz 2 c 74), which formed the basis of
155
further developments in most of these countries.
153 Lucasfilm Ltd v. Ainsworth [2009] EWCA Civ 1328; Crosstown Music Company 1,LLC v Rive Droite Music Ltd & Ors [2010]
EWCA Civ 1222; Cooper v Universal Music Australia Pty Ltd [2006] FCAFC 187.
154 Section 1(1): “Subject to the provisions of this Act, copyright shall subsist throughout the parts of His Majesty’s Dominions
to which this Act extends for the term hereinafter mentioned in every original literary dramatic musical and artistic work
…” See also Butterworth and Co (Publishers) Ltd v Ng Sui Nam [1987] RPC 485 (CA) [Singapore].
155 Fauolo v Gray [1997] WSSC1 (Supreme Court of Western Samoa). “Copyright has its origins in the common law, but is
now derived from the provisions of the Copyright Act.” Ashdown v Telegraph Group Ltd [2001] EWCA Civ 1142. The
position in the USA is more complicated due to its federal structure.
177
COPYRIGHT: INTRODUCTION
Finally, there is the current UK Copyright, Designs and Patents Act of 1988
(as amended) which, in addition to TRIPS, had to comply with copyright
directives of the European Union. In form it differs from the classical
common-law copyright statutes, although much remained the same.
156 Directive 93/98/EEC harmonizing the term of protection of copyright and certain related rights has been amended by
Directive 2001/29/EC of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the
information society . The consolidated version of Directive 93/98/EEC is available at: http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=CONSLEG:1993L0098:20010622:EN:PDF.
157 Directive 2011/77/EU of 27 September 2011 amending Directive 2006/116/EC on the term of protection of copyright and
certain related rights, OJ, 2011, L265/1.
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Databases which aim to be complete, that is, where the entries are selected
by objective criteria, are not entitled to copyright protection but to sui
generis database rights. While copyright protects the creativity of an author,
database rights specifically protect the qualitatively and/or quantitatively [a]
substantial investment in either the obtaining, verification or presentation of
the contents: without a substantial investment (which need not be financial),
a database is not entitled to protection. The period of protection for these
sui generis rights is 15 years while that of the other database rights is 70 years.
24. Civil-law: The civil-law countries did not have a basic law similar to
UK Copyright Act of 1911 but their laws developed congruently based on
principles laid down in the French Literary and Artistic Property Act, Paris
(1793), namely that the principle that an exclusive right is conferred on
authors because their property flows from their intellectual creation and
the Prussian Copyright Act of 1837 which comprised the core concepts of
modern copyright, namely that the author rather than the publisher was at
the center of the protection, and and the protected subject matter consisted
of abstract works, rather than specific physical goods.158
BISHOP v STEVENS
1990 CanLII 75 (SCC) [Canada]
158 L. Bently & M. Kretschmer (ed) Primary Sources on Copyright (1450-1900): www.copyrighthistory.org.
179
COPYRIGHT: INTRODUCTION
As with many definitions in the Act and its antecedents, very wide
terms have been employed. The only reason for this can be an
intention to cover future technical innovations by using general
words. Legislative inertia ought not to impede human ingenuity and
the reasonable protection thereof. Typical is the case of computer
programs. The wide wording of the Act made it possible to grant
them protection as literary works. It was only in the amending Act
that the Legislature dealt with the subject. This general scheme of
the Act suggests to me that the definitions in the Act should be
interpreted “flexibly, so that it would cover new technologies as
they appeared, rather than to interpret those provisions narrowly
and so force [the Legislature] periodically to update the act” (WGN
Continental Broadcasting Co v United Video Inc 693 F.2d 622 at 627).
159 Cf Navitaire Inc v Easyjet Airline Co [2004] EWHC 1725 (Ch) (30 July 2004).
180
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applying the Copyright Act to a realm that includes the Internet and
the databases at issue in this case, courts face unique challenges,
but in confronting them, the public benefits of this digital universe
should be kept prominently in view.
The proper balance among these and other public policy objectives
lies not only in recognizing the creator’s rights but in giving due
weight to their limited nature. In crassly economic terms it would
be as inefficient to over-compensate artists and authors for the right
of reproduction as it would be self-defeating to under-compensate
them. Once an authorized copy of a work is sold to a member of the
public, it is generally for the purchaser, not the author, to determine
what happens to it.
181
COPYRIGHT: INTRODUCTION
28. Copyright protects expression and not ideas: The TRIPS Agreement
entrenches the principle that copyright protection does not extend to ideas,
procedures, methods of operation, or mathematical concepts as such but
applies to expressions only (Art. 9.2).
It is often said that copyright subsists not in ideas but in the form in
which the ideas are expressed. The distinction between expression
and ideas finds a place in TRIPS, to which the United Kingdom is a
party. Nevertheless, it needs to be handled with care. What does it
mean? As Lord Hailsham of St Marylebone said, “it all depends on
what you mean by ‘ideas’”.
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If one examines the cases in which the distinction between ideas and
the expression of ideas has been given effect, I think it will be found
that they support two quite distinct propositions. The first is that a
copyright work may express certain ideas which are not protected
because they have no connection with the literary, dramatic, musical
or artistic nature of the work. It is on this ground that, for example,
a literary work which describes a system or invention does not entitle
the author to claim protection for his system or invention as such.
The same is true of an inventive concept expressed in an artistic work.
However striking or original it may be, others are (in the absence
of patent protection) free to express it in works of their own. The
other proposition is that certain ideas expressed by a copyright work
may not be protected because, although they are ideas of a literary,
dramatic or artistic nature, they are not original, or so commonplace
as not to form a substantial part of the work. It is on this ground
that the mere notion of combining stripes and flowers would not
have amounted to a substantial part of the plaintiff’s work. At that
level of abstraction, the idea, though expressed in the design, would
not have represented sufficient of the author’s skill and labour as to
attract copyright protection.
183
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184
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I. MORAL RIGHTS
31. The Berne obligation in relation to moral rights: The Berne Convention
obliges Member States to recognize the moral rights of authors in these terms:
Independently of the author’s economic rights, and even after the transfer
of the said rights, the author shall have the right to claim authorship of the
work and to object to any distortion, mutilation or other modification of,
or other derogatory action in relation to, the said work, which would be
prejudicial to his honor or reputation.
32. The nature of moral rights: Moral rights basically are the right to
make the work public, the right of recognition as author, and the right of
preserving the integrity of the work. How these rights are circumscribed are
matters for local legislation and judicial interpretation. They may survive the
death of the author.
185
COPYRIGHT: INTRODUCTION
In the material world, laws are geared to protect the right to equitable
remuneration. But life is beyond the material. It is temporal as well.
Many of us believe in the soul. Moral rights of the author are the
soul of his works. The author has a right to preserve, protect and
nurture his creations through his moral rights.
33. The different approaches to moral rights: The approach to moral rights
differs between common-law and civil-law jurisdictions. Generally speaking,
the protection in civil-law countries is more extensive.
The Act provides the respondent with both economic and ‘moral’
rights to his work. The distinction between the two types of rights
and their respective statutory remedies is crucial.
186
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160 See also Desputeaux v. Éditions Chouette [2003] 1 SCR 178, 2003 SCC 17 [Canada].
187
COPYRIGHT: INTRODUCTION
34. The common-law approach: Under Canadian law, for example, the
author of a work has the right to the integrity of the work and the right,
where reasonable in the circumstances, to be associated with the work as its
author by name or under a pseudonym, and the right to remain anonymous.
However, the author’s right to the integrity of a work is infringed only if the
work is to the prejudice of the honor or reputation of the author, distorted,
mutilated or otherwise modified; or used in association with a product,
service, cause or institution.
35. The civil-law approach: According to the laws of the Netherlands, the
author of a work has, even after assignment of copyright, the following
moral rights:
In France, certain moral rights - unlike pecuniary rights which lapse 70 years
after the death of the author - are perpetual, inalienable and not subject to
limitation in terms of time, and they are transmitted to the author’s heirs
upon death.
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Although the defendant [Y] promised to pay the plaintiff for producing [the
statues]; and after having requested to produce the bronze statues, had
them produced actually, and thanked the plaintiff profusely, the defendant
has recently alleged that the person who produced the bronze statues was
actually the defendant and that the plaintiff was only an assistant. The
plaintiff’s pride was seriously harmed.
189
190
COPYRIGHT: SUBSISTENCE
OF COPYRIGHT
CHAPTER VIII
A. FORMALITIES (1-2)
B. OWNERSHIP (3-11)
D. WORK (16-21)
E. ORIGINALITY (22-24)
G. FIXATION (27)
191
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
A. FORMALITIES
2. Effect on onus: The fact that copyright is not registered means that a
person who wishes to assert copyright must prove the subsistence of copyright.
In connection with works such as computer programs, cinematographic works
and the like it may be an arduous and expensive exercise.
B. OWNERSHIP
161 Toner v Kean Construction (Scotland) Ltd [2009] ScotCS CSOH_105; Forbes v Strathclyde Partnership for Transport & Anor
[2011] ScotCS CSOH_47.
192
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The word “author” has a technical meaning; and the author is not
necessarily the person who first makes or creates a work. It depends
on the nature of the work. In the case of a computer program, the
author is “the person who exercised control over the making of the
computer program”.
5. Author and owner: The author is not necessarily the owner of the
copyright in a work. Although the actual author is usually the first owner
of copyright, the first owner may be someone else. For instance, copyright
is often conferred on works made by or under the direction or control of
the state or certain international organizations, and the ownership of any
such copyright vests initially in the state or the international organization
concerned, and not in the author.
6. Employees: The employer – and not the actual author – is often the
first owner of any copyright subsisting in works made in the course of the
author’s employment under a contract of service or apprenticeship. This
kind of provision, which is typical in common-law jurisdictions, can also be
found in civil-law countries such as Japan. There, the authorship of a work
162 There are other possibilities under Art.14bis of the Berne Convention.
193
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
In France, the employer’s right to publish does not include the right to
republish, the argument being that the existence of an employment contract
does not waive the enjoyment of the originator›s intellectual property rights;
and in the absence of a specific agreement, concluded in accordance with the
statutory conditions, an originator does not transfer the right to reproduce
his work to his employer by the sole fact of the initial publication.163
163 Cour de cassation (1 chambre civile), 12 juin 2001, Rillon c/ Sté Capital Méda.
194
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164 Telephonic Communicators International Pty Ltd v Motor Solutions Australia Pty Ltd [2004] FCA 942 [Australia].
165 Cf Heptulla v M/S Orient Longman 1989 PTC 157 [India].
166 Crosstown Music Company 1,LLC v Rive Droite Music Ltd & Ors [2010] EWCA Civ 1222.
195
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
10. Licensees: Exclusive licensees may also have the right to claim without
affecting the rights of the owner.
196
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11. Joint authors: Copyright Acts recognize the concept of joint authors.167
Co-authors should litigate jointly.168
Section 10(1) of the Copyright Designs and Patents Act 1988 defines
a work of joint authorship as “a work produced by the collaboration
of two or more authors in which the contribution of each author is
not distinct from that of the other author or authors”. This provision
does not turn someone who is not an author into an author. It is
concerned to categorize works which are made from the input of
two or more authors.
14. First publication. If the work was not made by a qualified author,
copyright will be conferred on it if the work was first published either within
the jurisdiction or in a convention country. The initial ownership of copyright
167 Brighton v Jones [2004] EWCH 1157 [UK]; Fisher v Brooker & Ors [2009] UKHL 41.
168 Feldman NO v EMI Music SA (Pty) Ltd 2010 (1) SA 1 (SCA).
197
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
conferred in these cases vests in the author unless the work was made in the
course and scope of an employment contract or was commissioned.
D. WORK
Others, like Canada, define the term “original literary, dramatic, musical
and artistic work” to every original production in the literary, scientific or
artistic domain, whatever may be the mode or form of its expression, such
as compilations, books, pamphlets and other writings, lectures, dramatic or
dramatico-musical works, musical works, translations, illustrations, sketches
and plastic works relative to geography, topography, architecture or science.
This is not much different from the civil tradition where the general term of
the Berne Convention namely literary, scientific or artistic works is defined
by means of a similar list, but there one finds that the definition is extended
because the list is not exclusive and can “generally [include] any creation
in the literary, scientific or artistic areas, whatever the mode or form of its
expression” as in the Dutch definition.
First one must identify the artistic work relied upon and then decide
whether it has been reproduced by copying of the work as a whole
or of any substantial part of it. That is the effect of s. 3(1) and s.
16(1) of the Act. It is an aspect of UK copyright law untouched by
any EU harmonization.
169 Computer programs must, by virtue of a TRIPS requirement, be protected as literary works.
198
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18. The definition of literary work. It will be recalled that the Berne
Convention uses an expansive and non-limiting definition of literary and
artistic works to describe the works that are entitled to copyright protection
because these works include every production in the literary, scientific and
artistic domain, whatever may be the mode or form of expression, such as
books, pamphlets and other writings and so forth.
199
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
And “graphic work”, for example, could include any painting, drawing,
diagram, map, chart or plan, and any engraving, etching, lithograph,
woodcut or similar work.
200
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E. ORIGINALITY
22. Originality in the whole: The inquiry is whether the work was original.
The inquiry is not whether its parts were original. A work may be original
even if its making involves the infringement of copyright in some other work.
That would be the case where the work infringes by taking a substantial part
of the premier work but, in addition, contains original material.
201
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HENKEL KG v HOLDFAST
[2006] NZSC 102 [New Zealand]
We think the Judge [suggested] that aspects of the design, strictly the
drawing, were unoriginal. His method of expression in the context
risks the appearance of confusing originality with novelty. Later
the Judge correctly identified that the claimed originality lay in the
arrangement of a number of unoriginal features. But the Judge then
proceeded to say that the trial Judge had failed ‘to remove from the
collocation matters of no originality’. With respect, that is not the
way to approach an arrangement case. If the Court were to do what
Baragwanath J appears to have suggested, nothing would be left.
An arrangement case is concerned with the author’s arrangement of
features which in themselves have no originality. The originality lies
in the arrangement. To remove from the arrangement matters of no
originality would, in these circumstances, leave nothing to arrange;
all that would be left would be a blank sheet of paper.
The approach of the US Supreme Court is different. Its test is this: “Original,
as the term is used in copyright, means only that the work was independently
created by the author (as opposed to copied from other works), and that it
possesses at least some minimal degree of creativity.”
170 The Newspaper Licensing Agency Ltd & Ors v Meltwater Holding BV & Ors [2010] EWHC 3099 (Ch).
202
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The publishers of law reports alleged that the Law Society’s library infringed
its copyright by providing photocopies of the judgments or by providing
the facility for members to make copies. One issue was whether the law
reports were original. In this regard the Court found that the head-notes,
the case summaries and the topical index were original but that the bodies
of the reported judicial decisions were not, even if they were edited by the
publishers.
203
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In reaching this conclusion, I have had regard to: (1) the plain
meaning of “original”; (2) the history of copyright law; (3) recent
jurisprudence; (4) the purpose of the Copyright Act; and (5) that this
constitutes a workable yet fair standard.
The plain meaning of the word “original” [point (1)] suggests at least
some intellectual effort, as is necessarily involved in the exercise of
skill and judgment. Original’s plain meaning implies not just that
something is not a copy. It includes, if not creativity per se, at least
some sort of intellectual effort. As Professor Gervais has noted,
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24. The civil-law approach. The civil-law has a stricter approach. It requires
some level of creativity.171 The work must carry the personal stamp of the author.
The facts: The issue in this case concerned the legal question whether a
collection of key words or lemmas could be entitled to copyright. The work
concerned was the standard Dutch dictionary known as Van Dale. The
Dutch Hoge Raad, sitting as a cour de cassation, had to decide the legal
question. It held that such a work is entitled to copyright provided it has
a unique and original character and if it bears the personal stamp of the
author. The case was then referred back for a decision on the facts and Van
Dale’s copyright was upheld. It should be noted that the copyright in the
dictionary itself was never in issue since everyone accepted that the bigger
work consisting of the book (which defined the listed words) was entitled
to copyright protection.
171 Construction Denis Desjardins inc. c. Jeanson, 2010 QCCA 1287 [Quebec].
205
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
A collection of words that form part of the Dutch language does not
automatically meet this requirement, since in itself such a collection
is no more than a quantity of factual data that, as such, does not
qualify for copyright protection. The case would be different only
if the collection were the result of a selection that expressed the
author’s personal view.
The author and copyright owner of a book on law for the general
public contended that the texts and charts in the defendant’s work
of the same nature are either identical or closely similar to his, and
therefore violate his copyright.
206
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207
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
OPERATING INSTRUCTIONS
BGH October 10, 1991 I ZR 147/89 [Germany]
EXPLODED DIAGRAM
BGH February 28, 1991 I ZR 88/89 [Germany]
From a legal perspective, the court below was right to assume that
the personal, intellectual creative input in scientific and technical
descriptions must lie in the form itself. It was also right to accept
that the requirement for individual creative form should not be set
too high in the context of this condition: descriptions of this kind are
208
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26. The enquiries can be entwined and are objective: A work has to be
original. Whether an alleged work is proper subject-matter for copyright
protection involves an objective test, both in respect of originality and work;
and the two inquiries can become entwined. [The following case concerned
the originality of a diary.]
The types of works listed in the Act are “eligible for copyright”
provided they are “original”. [That] presupposes, as a general rule,
two different inquiries: first, whether the work relied upon falls
within one of the categories and, if so, whether it was original. But,
as pointed out by Blakeney and McKeough Intellectual Property:
Commentary and Materials (1987) at 27:
209
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
While it is true that the actual time and effort expended by the
author is a material factor to consider in determining originality, it
remains a value judgment whether that time and effort produces
something original.
210
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G. FIXATION
The rule does not apply to works that are not literary, dramatic or musical such
as a broadcast or program-carrying signal; they require either a broadcast or
transmission in order to be eligible for copyright.
172 Green v Broadcasting Corp of New Zealand [1989] RPC 469; Bormley v EMI Records (Ireland) Ltd [1998] IESC 44.
211
COPYRIGHT: SUBSISTENCE OF COPYRIGHT
These matters are dealt with in the chapter on Copyright Piracy and are
therefore omitted from this chapter.
212
COPYRIGHT
INFRINGEMENT
CHAPTER IX
B. REPRODUCTION (6-12)
E. ADAPTATIONS (16)
213
COPYRIGHT: INFRINGEMENT
A. TYPES OF INFRINGEMENT
1. Nature of the work: The rights accorded to owners and the ways in
which these rights can be infringed differ depending on the type of the
protected work. By the nature of things, the infringement of a literary work
will for instance differ from that of a broadcast.
HENKEL KG v HOLDFAST
[2006] NZSC 102
Copyright is infringed by any person, not being the owner of the copyright,
who, without the license of the owner, does or causes any other person to
214
CHAPTER 9
do, within the jurisdiction, any act which the owner has the exclusive rights
to do or to authorize. Direct infringement refers to the performance of such
an infringing act by the defendant.
If the person who made the article could not lawfully (i.e. without
infringing copyright) have made it in South Africa, a person who,
with the requisite knowledge and without license, either imports the
article into South Africa or sells or distributes it here commits an
infringement of copyright in terms of s 23(2).
This subject is dealt with in more detail later in this chapter. It is first necessary
to determine what amounts to primary infringement because, in general
terms, indirect infringement is not possible without primary infringement.
4. The boundary between mere taking of general concepts and ideas and
copying in the copyright sense:174
174 Allen v Bloomsbury Publishing Plc & Anor [2010] EWHC 2560 (Ch).
215
COPYRIGHT: INFRINGEMENT
175 See also Lambretta Clothing Company Ltd vTeddy Smith (UK) Ltd [2004] EWCA Civ 886.
216
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B. REPRODUCTION
217
COPYRIGHT: INFRINGEMENT
218
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219
COPYRIGHT: INFRINGEMENT
The fact that the actual newspaper page is not fully or identically
reproduced in the database and the articles are therefore presented
in a different form from a paper newspaper is irrelevant. It is not the
physical manifestation of the work that governs; it is whether the
product perceivably reproduces the exercise of skill and judgment by
the publishers that went into the creation of the work.
220
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221
COPYRIGHT: INFRINGEMENT
C. CAUSAL CONNECTION
179 Baigent & Anor v The Random House Group Ltd [2007] EWCA Civ 247 [UK]; Toy Major Trading Co v Hang Shun Plastic
Toys Civil Appeal No. 11 of 2007 [Hong Kong Special Administrative Region].
222
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The above statement must not be read to mean that the copyright
plaintiff is awarded a lower standard of proof. He must still run
his case in the most thorough and best way he can, to show the
existence of probative similarities leading to the inference of copying,
whereupon the opportunity then arises for the defendant to explain
those difficulties away.
223
COPYRIGHT: INFRINGEMENT
GILHAM v REGINA
[2009] EWCA Crim 2293.
The term “substantial part” has a legislative pedigree [and] keeps sepa-
rate the concepts of substantial part and fair dealing. Accordingly:
224
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There are two instances to be considered under this head: first, where
an identifiable part is taken and, second, where there is an alteration
of the original.
Section 16(3) of the 1988 Act says that copying a copyright work is
a copyright infringement if the copying is of “the work as a whole
or any substantial part of it”. Section 16(3) may come into play in
two quite different types of case. One type of case is, obviously,
where an identifiable part of the whole, but not the whole, has been
copied. For example, only a section of a picture may have been
copied, or only a sentence or two, or even only a phrase, from a
poem or a book, or only a bar or two of a piece of music, may have
been copied. In cases of that sort, the question whether the copying
of the part constitutes an infringement depends on the qualitative
importance of the part that has been copied, assessed in relation to
the copyright work as a whole.
180 Laddie, Prescott & Vitoria, The Modern Law of Copyright and Designs.
225
COPYRIGHT: INFRINGEMENT
E. ADAPTATIONS
181 Laddie, Prescott & Vitoria, The Modern Law of Copyright and Designs.
226
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227
COPYRIGHT: INFRINGEMENT
and (3) the secondary infringer sold, distributed or exposed for sale
the infringing goods. Perhaps the most straightforward form of
secondary infringement arises when one sells a copy of an infringing
work. Under s. 27(2)(a), ‘[i]t is an infringement of copyright for any
person to ... sell ... a copy of a work ... that the person knows or
should have known infringes copyright’.
228
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The question now is whether there has been copying, not what the
intention of the copier was in doing it. If the alleged infringer denies
copying, and is disbelieved, then what matters is the finding of fact
as to copying which follows, though no doubt his being disbelieved
may also have other forensic effects as to the findings made by the
judge in the case.
I cannot see how the intention with which any copying was done
is or can be legally relevant to the issue whether the copying is
an infringement, either generally or by reference to the question
whether what was copied is a substantial part of the copyright work.
MILPURRURRU v INDOFURN
(1994) 30 IPR 209
229
COPYRIGHT: INFRINGEMENT
G. CONTRIBUTORY INFRINGEMENT
230
COPYRIGHT
DEFENSES
CHAPTER X
231
COPYRIGHT: DEFENSES
BUNDESGERICHTSHOF I ZR 191/08183
183 Bundesgerichtshof I ZR 191/08 Verkündet am 14. Oktober 2010, a judgment upheld by the German Constitutional
Court (Bundesverfassungsgericht): BVerfG, 1 BvR 1248/11 vom 15.12.2011, Absatz-Nr. (1 - 38), http://www.bverfg.de/
entscheidungen/rk20111215_1bvr124811.html. Freely translated.
On the question of censorship by internet service providers see: Edwards WIPO Study on the Role & Responsibility of
Internet Intermediaries in the field of Copyright & Related Rights p 12: http://www.wipo.int/export/sites/www/copyright/
en/doc/role_and_responsibility_of_the_internet_intermediaries_final.pdf
232
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Article 9(2) of the Berne Convention (1967 revision) states in this regard that
national legislation may permit the reproduction of works in certain special
cases, provided that such reproduction does not conflict with a normal
exploitation of the work and does not unreasonably prejudice the legitimate
interests of the author. Article 13 of the TRIPS Agreement is in similar terms:
233
COPYRIGHT: DEFENSES
The three Berne requirements are cumulative and are to be applied one after
the other. They have been formulated in these terms:184
The effect of this type of provision is that a court must assess in each instance
whether all these conditions exist. Other countries interpret the Berne
Convention differently.
The Berne Convention provides that legislation may exclude protection for
political speeches and speeches delivered in the course of legal proceedings
and may prescribe conditions under which lectures, addresses and other works
of the same nature which are delivered in public may be reproduced (Art. 2bis).
184 Cohen Jehoram Restrictions on copyright and their abuse [2005] EIPR 359; Ricketson The Berne Convention 1886-1996
p 482.
185 See further Article 15 Rome Convention; Article 13 TRIPS Agreement; Article 10 WCT; Article 16 WPPT.
234
CHAPTER 10
Apart from special provisions relating to the possible free use of certain
articles and broadcast works and works seen or heard in connection with
current events (Art 10bis), compulsory licenses for broadcasting and the like
(Art 11bis), the Berne Convention (Art 10) states the following:
“Fair dealing” is defined to mean the making use of a [work] which has
already been lawfully made available to the public, “for a purpose and to an
extent which will not unreasonably prejudice the interests of the owner of
the copyright.”
186 HRH the Prince of Wales v Associated Newspapers Ltd [2006] EWHC 522 (Ch) [UK].
235
COPYRIGHT: DEFENSES
187 See further CCH Canadian Ltd v Law Society of Upper Canada2004 SCC 13 [Canada].
236
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HUBBARD v VOSPER
[1972] 1 All ER 1023 (CA) [UK]
237
COPYRIGHT: DEFENSES
■■ In the same vein, the amount of the work used can be relevant:
238
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Fair dealing, as a concept, appears not only in section 30(2), but also
in section 29 (fair dealing for the purposes of research or private
study) and section 30(1) (fair dealing for the purpose of criticism or
review). That is the context in which the phrase must be construed.
When those provisions are read together, it seems to me that a
dealing by a person with copyright work for his own commercial
advantage – and to the actual or potential commercial disadvantage
of the copyright owner – is not to be regarded as a ‘fair dealing’
unless there is some overriding element of public advantage which
justifies the subordination of the rights of the copyright owner. In
my view it was the recognition that the property right conferred on
the copyright owner by the 1988 Act and its statutory predecessors
– and which, subject to the provisions of the Act, the copyright
owner is entitled to protect and exploit – should yield, in appropriate
circumstances, to an overriding public interest in the promotion of
research or private study, in the publication of comment or criticism,
or in the reporting of current events which led Parliament to include
the fair dealing provisions in the legislation.
10. Fair use in US law: US law is different because it uses the concept
of fair use and sets out a list of purposes for which the reproduction of a
particular work may be considered fair, such as criticism, comment, news
reporting, teaching, scholarship, and research. It also sets out four factors
that have to be considered in determining whether or not a particular use is
fair: the purpose and character of the use, including whether such use is
188 The judgment was overruled on appeal, but on another point: [2001] UKHL 38.
239
COPYRIGHT: DEFENSES
240
CHAPTER 10
189 British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd [1986] 1 All ER 850 [UK]; Klep Valves (Pty) Ltd v Saunders
Valve Co Ltd 1987 (2) SA 1 (A) [South Africa].
190 Cf Samsomite Corporation v Vijay Sales [2000] FSR 463 (HC) [India]; Lambretta Clothing Company Ltd v Teddy Smith (UK)
Ltd [2004] EWCA Civ 886.
241
242
PATENTS:
GENERAL PRINCIPLES
CHAPTER XI
D. TERRITORIALITY (12-15)
N. EMBODIMENTS (35)
243
PATENTS: GENERAL PRINCIPLES
A. LEGISLATIVE TEXTS
1. TRIPS: The TRIPS Agreement imposes obligations in relation to the
protection of patents on the Member States of the WTO. It also introduced
certain provisions of the Paris Convention by reference. Some of these will be
referred to in the course of the discussion and will form its basis. As before, it
will be assumed that the laws of the WTO Member States comply with these
provisions. For purposes of illustration a few national laws will also be quoted.
244
CHAPTER 11
However, there is a duty to provide for the protection of plant varieties either
by patents or by an effective sui generis system or a combination of them.191
The European Patent Convention (Art. 52), for instance, excludes the
following classes from its definition of “invention”:
In this regard it differs significantly from the position in the USA where
business methods and programs for computers are patentable.
191 The International Convention for the Protection of New Varieties of Plants is administered by the International Union for
the Protection of New Varieties of Plants (UPOV). This Case Book does not cover issues relating to protection of plant
varieties.
192 The exact scope of this exclusion has been the subject of many decisions.
193 Genentech Inc’s Patent [1989] RPC 147 (CA) [UK]; Chiron Corp v Murex Diagnotics Ltd [1997] RPC 535 (CA) [UK].
245
PATENTS: GENERAL PRINCIPLES
DIAMOND v CHAKRABARTY
(1980) 447 US 303, 100 S Ct 2204
The laws of nature, physical phenomena, and abstract ideas have been
held not patentable. Thus, a new mineral discovered in the earth or a
new plant found in the wild is not patentable subject matter. Likewise,
Einstein could not patent his celebrated law that E=mc2 nor could Newton
have patented the law of gravity. Such discoveries are “manifestations
of nature, free to all men and reserved exclusively to none.”
It is trite law that you cannot patent a discovery, but if on the basis of
that discovery you can tell people how it can be usefully employed,
then a patentable invention may result. This in my view would be
the case, even though once you have made the discovery, the way in
which it can be usefully employed is obvious enough.
246
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On the other hand, the granting of a patent (or at least the invoking
of it) restricts competition and gives the patentee a lead on the
competition. The invoking of the patent against third parties is
generally an appropriate means of influencing the behavior of those
third parties to the patent owner’s benefit. The fact that our social
system is based precisely on the encouragement of free competition
in the public interest is an argument, in this light, for allowing
the person who relies on a patent that is subsequently revoked or
declared void to bear the risk of his claims being disproved.
8. Negative right: It follows from the definition that a patent does not
entitle the patentee to use the invention, but only to prevent others from
using it. The exploitation of a later (dependent) patent, which is valid,
may for instance infringe the earlier master patent (although the second
247
PATENTS: GENERAL PRINCIPLES
194 See also the quotation from Panduit Corp v Stahlin Bros supra in Chapter 1.
195 See e.g. Particia Loughlan Patents: Breaking into the Loop (1998) 20 Sydney Law Review 553.
248
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The term of protection available shall not end before the expiration of
a period of twenty years counted from the filing date. [The footnote
reads: It is understood that those Members which do not have a
system of original grant may provide that the term of protection shall
be computed from the filing date in the system of original grant.]
249
PATENTS: GENERAL PRINCIPLES
Since patent rights are only granted (sometimes many) years after filing of the
application for a patent, this means that the effective term of patent protection
may be much shorter than 20 years. Another complicating factor is the fact
that for certain products, such as pharmaceuticals, some or other regulatory
permission is required before they may be marketed, and this can further
reduce the effective term of protection. For this reason some countries used to
provide for an extension of the term of a patent on the ground of inadequate
remuneration and others, such as the European Union, have provision for
supplementary protection certificates, which have the same effect.196
D. TERRITORIALITY
12. Territoriality: Patents are territorial. This principle is spelt out by the
Paris Convention (Art. 4bis), which provides:
13. The effect of the principle: In practical terms it means that an inventor
in country A may apply for a patent in A and may, within the period of one
year apply in country B for a patent in relation to the same invention. These
two patents will exist independently. They may differ in scope. The one
may lapse or be revoked without affecting the other. It also means that
a patentee can only sue for patent infringement in a country where the
invention is patented.197 The principle is also relevant for judging the legality
of parallel importation (the importation of so-called grey goods) and the
doctrine of patent exhaustion.198
196 Regulation (EC) No. 469/2009 concerning the supplementary protection certificate for medicinal products, OJ, 2009,
L152/1.
197 See further the section on jurisdiction in chapter 1 part I.
198 See the chapter on Exhaustion below..
199 As reported in translation [2001] ENPR 11.
250
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The effect of this judgment on its particular facts was undone by way of an
amendment to the US Patents Act but even that amendment has restricted
application as appears from the following extract.
251
PATENTS: GENERAL PRINCIPLES
252
CHAPTER 11
That exclusive jurisdiction is also justified by the fact that the issue of
patents necessitates the involvement of the national administrative
authorities.
BBS CASE
Japan Supreme Court
1 July 1997
253
PATENTS: GENERAL PRINCIPLES
patent owner can indeed enforce his Japanese patent right on the
accused products in Japan.
E. TYPES OF PATENTS
16. Types of patents: It follows from Art. 28 of TRIPS that patents are
classified either as (a) product patents or (b) process (method) patents.
Typically, the same patent may have claims for both types of inventions.
A process patent protects the patentee not only against the use of the
process within the jurisdiction but also against importation of goods made
elsewhere by the same process. The Paris Convention (Art. 5quater) provides
as follows:
Swiss form claims have been long accepted in the UK. Such a
claim steers clear of two obstacles to patentability, namely the
requirement of novelty and the ban on methods of treatment of
the human body by therapy. It follows a statement of practice
regarding “use claims” issued by the Swiss Federal Intellectual
Property Office. The generalized form of such a claim is “the
use of compound X in the manufacture of a medicament
for a specified (and new) therapeutic use”. Such claims are
unnecessary when X is new, for then X can be patented in itself.
But when X is old, a Swiss form of claim confers novelty and yet
is not a claim to a method of treatment.
254
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F. PATENT LITIGATION
20. The grant: The plaintiff must allege and prove that the patent has
been granted (not merely applied for) and that it was at all relevant times
255
PATENTS: GENERAL PRINCIPLES
21. Acts of infringement: The plaintiff must allege and prove that the
defendant has infringed one or more of the claims of the patent. The
practice in this regard is to plead one or more particular instances of
infringement which will be the subject of the evidence. If the act is
established, an inquiry into damages will follow and during this process the
extent of the infringement will be litigated.
The grounds of invalidity are usually enumerated in the statute and are limited
in number. The onus rests on the defendant to allege and prove the invalidity
of the patent and each particular statutory ground of invalidity relied on
must be pleaded separately and distinctly and considered separately by the
court. Although each objection must be considered separately, evidence on
one aspect may be relevant to another.
The attack of invalidity must, as far as possible, be directed towards the claims
relied on by the plaintiff, because some relief may be granted in respect of a
partially valid patent in some jurisdictions.201
200 In India, though, there is a specific provision in the Act to the effect that there is no such presumption: Standipack Pty
Ltd v Oswal Trading Co 1999 PTC (19) 479.
201 Ausplow (Pty) Ltd v Northpark Trading 3 (Pty) Ltd and Others [2011] ZASCA 123.
256
CHAPTER 11
dismissed. The issue can also be invoked, as in the case in the main
proceedings, in support of a declaratory action seeking to establish
that there has been no infringement, whereby the claimant seeks to
establish that the defendant has no enforceable right in regard to
the invention in question.
The civil onus is usually applied but the USA uses a higher standard.
257
PATENTS: GENERAL PRINCIPLES
The Canadian Patent Act (s 27) is an example of a statute that deals fully with
the requirements of a specification.202 It requires that the specification of an
invention must:
■■ correctly and fully describe the invention and its operation or use
as contemplated by the inventor;
■■ set out clearly the various steps in a process, or the method
of constructing, making, compounding or using a machine,
manufacture or composition of matter, in such full, clear, concise
and exact terms as to enable any person skilled in the art or
science to which it pertains, or with which it is most closely
connected, to make, construct, compound or use it;
■■ in the case of a machine, explain the principle of the machine
and the best mode in which the inventor has contemplated the
application of that principle;
■■ in the case of a process, explain the necessary sequence, if any,
of the various steps, so as to distinguish the invention from other
inventions; and
■■ must end with a claim or claims defining distinctly and in explicit
terms the subject matter of the invention for which an exclusive
privilege or property is claimed.
24. Patent grant: The patent grant will contain additionally the date of the
application and the date of grant and will reflect whether or not priority
in terms of the Paris Convention is claimed (i.e., whether the application is
based on the filing in a convention country).
202 The Canadian Supreme Court was not happy with the formulation of the provision, finding that it is not clear or concise:
Consolboard Inc v Macmillan Bloedel [1981] 1 SCR 504.
258
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Some laws require an abstract but provide that the abstract may not be used
in interpreting the specification. The specification may also contain a so-
called consistory clause, a paragraph or section which sets out the heart of
the invention. Quite often it is a recital of the first or broadest claim and is
inserted to avoid an attack of lack of fair basis or insufficiency.
The function of the claims is to define clearly and with precision the
monopoly claimed, so that others may know the exact boundary of
the area within which they will be trespassers. Their primary object
is to limit and not to extend the monopoly. What is not claimed is
disclaimed. The claims must undoubtedly be read as part of the
entire document and not as a separate document; but the forbidden
field must be found in the language of the claims and not elsewhere.
It is not sufficient for the inventor to discover his gold mine – he must also
peg out his claim. Outside the pegs, the gold, if it is there, is free to all.
SARTAS NO.1
30 IPR 486 [Australia]
259
PATENTS: GENERAL PRINCIPLES
RA-LIPASE CASE
Supreme Court of Japan
8 March 1991
260
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J. WHAT IS INFRINGEMENT?
The same applies, for example, to the South African Patents Act (s 45(1)):
The term “invention” in this provision means the invention claimed and not
the broader invention as described or the inventive idea.
CUTTER I
BGH, judgment of March 12, 2002 – X ZR 168/00 [Germany]
204 The UK the Patents Act defines the extent of “the invention” (s 125(1)) by stating:
“For the purpose of this Act an invention for a patent … shall, unless the context otherwise requires, be taken to be that
specified in a claim as interpreted by the description and any drawings contained in that specification, and the extent of
the protection conferred by a patent or application for a patent shall be determined accordingly.”
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“By his claims the inventor puts fences around the fields of
his monopoly and warns the public against trespassing on his
property. His fences must be clearly placed in order to give the
necessary warning and he must not fence in any property that is
not his own. The terms of a claim must be free from avoidable
ambiguity or obscurity and must not be flexible; they must be
clear and precise so that the public will be able to know not only
where it must not trespass but also where it may safely go.”
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32. All the essential integers must be taken before there can be an
infringement of the claim:
“the patentee must show that the defendant has taken each
and every one of the essential integers of the patentee’s claim.
Therefore if, on its true construction, the claim in a patent claims
a particular combination of integers and the alleged infringer of
it omits one of them he will escape liability.”
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M. INTEGERS OF CLAIMS
A claim for a new toothpaste may have more than one integer and may
read thus:
This claim may be divided into the following integers: (a) A dentifrice
comprising (b) a polishing agent, (c) a water-soluble fluoride-containing
compound which yields fluoride ions in aqueous solution, (d) a buffering
agent, (e) the dentifrice being such that its pH is from 5 to 6. In order to
infringe, each of these integers must be present in the defendant’s product.
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N. EMBODIMENTS
O. EXPERIMENTAL USE
36. The Bolar exception: It has become the norm to allow some experimental
use of patents by third parties without the consent of the patentee. One
of these is to permit someone to prepare a dossier for the registration of a
drug before the expiry of the patent. This is known as the Bolar exception
after the US case of Roche Pharmaceuticals v Bolar205 and the subsequent
legislative measures.
205 Roche Products v. Bolar Pharmaceutical, 733 F.2d 858 (Fed. Cir. 1984). Some countries do not regard the Bolar exception
under the experimental use exception.
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However, the defendant’s alleged or admitted actions may limit the scope of
the inquiry.
206 Compare BGH, Judgment of June 29, 2010, Crimpwerkzeug III Case X ZR 193/03 [Germany].
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At the outset I would point out that the comparison between the STC
[the plaintiff’s commercial product] and Genep Plus [the allegedly
infringing product], which is central to appellant’s argument, is
a misconceived approach. Apart from the fact that the STC was
not even a described embodiment of the invention, the correct
comparison in law is between claim 1, properly construed, and
Genep Plus. For the determination of the question as to whether or
not the plaintiff has proved an infringement of his patent turns upon
a comparison between the article or process, or both, involved in the
alleged infringement and the words of the claims in the patent.
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why the concepts of pith and marrow and purposive construction have
developed in the UK (see below, under E. The Doctrine of Equivalents).
Courts have always frowned on immaterial alterations or omissions. The
next citations (which contain some unjustified hyperbole) set the background
to the problem.
When, however, you come to make that comparison, how can you
escape from considering the relative magnitude and value of the
things taken and of those left or varied; it is seldom that the infringer
does the thing, the whole thing, and nothing but the thing claimed
by the specification. He always varies, adds, omits and the only
protection the patentee has in such a case lies, as has often been
pointed out by every Court, from the House of Lords downward,
in the good sense of the tribunal which has to decide whether the
substance of the invention has been pirated.
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C. STUDIED MISINTERPRETATION
ideas rarely are difficult to grasp. The difficulties come from the
language. To this day I am troubled as I hear arguments in patents
cases, by the slang of the specialty. The thoughts behind the words
rarely require a colossus.207
TOPLIFF v TOPLIFF
145 U.S. 156, 171 (1892)
The object of the patent law is to secure inventors what they have
actually invented or discovered, and it ought not to be defeated by
a too strict and technical adherence to the letter of the statute or by
the application of artificial rules of interpretation.
WHITE v DUNBAR
119 US 47 (1886) [USA]
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The board adds that the skilled person when considering a claim
should rule out interpretations which are illogical or which do not
make technical sense. He should try, with synthetical propensity i.e.
building up rather than tearing down, to arrive at an interpretation
of the claim which is technically sensible and takes into account the
whole disclosure of the patent (Article 69 EPC). The patent must be
construed by a mind willing to understand not a mind desirous of
misunderstanding.208
208 The statement that a patent ‘must be read by a mind willing to understand, not by a mind desirous of misunderstanding’
must have been taken from Lister v. Norton Brothers and Co. (1886) 3 RPC199 (Ch D) per Chitty J.
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The appeal thus raises the fundamental issue of how best to resolve the
tension between ‘literal infringement’ and ‘substantive infringement’ to
achieve a fair and predictable result. There has been considerable discussion
of this issue in Canada and elsewhere, which I will discuss briefly in support
of the following propositions:
209 See also Ranbaxy Australia Pty Ltd v Warner-Lambert Company LLC (No 2) [2006] FCA 1787; Monsanto Co v MDB Animal
Health (Pty) Ltd [2001] ZASCA 4 [South Africa].
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10. Interpretation is for the court and expert evidence has a limited role
in relation to patent interpretation: Interpretation is not a jury question.
This means that it is not a factual issue but a legal one. As the German
Federal Court said, the granted patent claim and its subject matter have
a normative character and their meaning must therefore be determined
as a question of law.210
“The role of the expert was not to interpret the patent claims
but to put the trial judge in the position of being able to do so
in a knowledgeable way.”
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The construction of the specification is for the Court, not for the
expert witness.
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11. Basis of doctrine: The problem with which courts struggle in determining
the scope of the protection given by the claims is to balance the interests of
the patentee and those of the public. It is a question of balancing certainty
with fairness. A literal approach to the interpretation of claims may lead to
limiting the scope of the invention unduly while an expansive interpretation
may lead to uncertainty. There has thus arisen different approaches, which
Prof Cornish has described as the conflict between fence post claiming
(marking the boundary of the invention) and sign post claiming (specifying
the essential inventive concept), while in US jurisprudence the conflict has
been described as between central claiming (describing the core principles
of the invention) and peripheral claiming (where the claims describe the
outer limits of the invention).211
If [the interpreter] has been told (in the British tradition) that the
claims are there to define the outer limits of the patentee’s exclusive
rights in the invention so that competitors know where they stand,
he will interpret them relatively strictly. If, on the other hand, he has
been told (in the German tradition) that the claims are guidelines
identifying the principal features of the invention which have been
described in more detail in the description and drawings, he will
interpret the claims relatively liberally.212
The basis of the doctrine (also called the pith and marrow doctrine) is that
essential integers cannot be omitted or replaced (by equivalents) without
infringing the claim. Equivalents are usually mechanical equivalents;
chemical equivalents are possible but rare.213 Logically, though, the question
of equivalence ought never to arise because once an integer is inessential
whatever the alleged infringer does in relation to it is irrelevant.
211 Donald S Chisum Patent Claim Interpretation in David Vaver and Lionel Bently Intellectual Property in the New Millennium
- Essays in Honour of William R. Cornish (2004) p 98.
212 Purposive Construction – Seven Reasons Why Catnic Is Wrong European Intellectual Property Review, November 1999
and the CIPA Journal, August 1999.
213 Beecham v Bristol [1978] RPC 153 (HL) [UK].
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The facts: The patent in question related to expanding metal bracelets for
wristwatches. The links in the bracelets were held together with U-shaped
connecting bows. The alleged infringement differed from the claim in that
C-shaped connecting bows were used instead of U-shaped ones. The alleged
infringers failed to give any reason for their change of the design. Although
both types of bracelets worked in essentially the same way, the House of
Lords decided that there was no infringement. Interestingly, the South
African Appellate Division, while adopting the English legal approach, came
to the opposite conclusion on the facts.214
214 Frank & Hirsch (Pty) Ltd v Rodi & Wienenberger AG 1960 3 SA 747 (A).
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First, the question is whether the relevant claim has been infringed.
This is purely a question of construction of the claim read as a matter
of ordinary language, in the light of the complete specification
taken as a whole; but the claim must be construed as a document
without having in mind the alleged infringement. What is not
claimed is disclaimed. The claim must be read through the eyes
of the notional addressee, the man who is going to carry out the
invention described. There are many authorities on this, but it is
unnecessary to review them, for I have already said enough to show
that, in my view, this document must be read through the eyes of
the common man at his bench.
In considering the claim the court must ascertain what are the
essential integers of the claim; this remains a question of construction
and no general principles can be laid down.
The principle that there may be infringement by taking the “pith and
marrow” or the substance of an invention does not mean that there
will be an infringement where the patentee has by the form of his
claim left open that which the alleged infringer has done. And it does
not affect the fundamental rule that there will be no infringement
unless the alleged infringer has taken all of the essential features or
integers of the patentee’s claim.
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The invention must be defined with precision and with clarity in the
claims. [The] application of this principle [of the functional equivalent]
is limited to two possible situations:
To ascertain what are and what are not the essential features or
integers of a claimed invention the specification must be read and
interpreted purposively or realistically, with the understanding of
persons with practical knowledge and experience of the kind of work
in which the invention was intended to be used and in the light of
what was generally known by such persons at the date of the patent,
which date by our law is the priority date of the claim.
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F. PURPOSIVE CONSTRUCTION
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The Catnic analysis therefore was not a departure from the earlier
jurisprudence in the United Kingdom or in this country. It is no
disrespect to Lord Diplock to suggest that at least to some extent
he poured some fine old whiskies into a new bottle, skillfully refined
the blend, brought a fresh clarity to the result, added a distinctive
label, and voilà “purposive construction”. In Catnic, as in the earlier
case law, the scope of the monopoly remains a function of the
written claims but, as before, flexibility and fairness is achieved by
differentiating the essential features (‘the pith and marrow’) from
the unessential, based on a knowledgeable reading of the whole
specification through the eyes of the skilled addressee rather than on
the basis of ‘the kind of meticulous verbal analysis in which lawyers
are too often tempted by their training to indulge’.
18. The facts in Catnic: Catnic sought to do away with what has been
called an over-literal claim construction mindset. The facts were simple. The
claim claimed a lintel, and its load-bearing had to be vertical. The question
was whether the term “vertical” in context meant in strict geometrical terms
90 degrees off the horizontal or whether it meant something close to the
true vertical that could do the job. The court found that the addressee
would have understood the term in context with reference to its function
and that the geometrical meaning was not intended. Put differently, the
word “vertical” has more than one meaning; and sensibly and realistically
the meaning that fits the purpose of the invention should apply. The cynic
may have asked: Since the typical builder never builds something truly
vertical, why should he have thought that this lintel had to be 90 degrees
from the horizontal? It is fair to assume that the Court’s answer may have
been different had the claim stated that the lintel had to be 90 degrees from
the vertical. On the other hand, if the inventor did not have the geometrical
meaning in mind, why did he not say substantially vertical?
19. The Catnic judgment: This is what the judgment had to say.
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The question, of course, does not arise where the variant would in fact
have a material effect upon the way in which the invention worked. Nor
does it arise unless at the date of the publication of the specification it
would be obvious to the informed reader that this [i.e. that the variant
could have no material effect upon the way the invention works] was
so. Where it is not obvious, in the light of then-existing knowledge,
the reader is entitled to assume that the patentee thought at the time
of the specification that he had good reason for limiting his monopoly
so strictly and had intended to do so, even though subsequent
work by him or others in the field of the intervention might show
the limitation to have been unnecessary. It is to be answered in the
negative only when it would be apparent to any reader skilled in the
art that a particular descriptive word or phrase used in a claim cannot
have been intended by a patentee, who was also skilled in the art, to
exclude minor variants which, to the knowledge of both him and the
readers to whom the patent was addressed, could have no material
effect upon the way in which the invention worked.
20. One is still at the end of the day concerned with the meaning of the
language used:
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Nonetheless purpose is not the be-all and end-all. One is still at the
end of the day concerned with the meaning of the language used.
It is the terms of the claims which delineate the patentee’s territory.
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22. The EPC: The legal developments in the UK after the Catnic decision
were affected by the accession by the UK to the EPC and the new Patents
Act, which incorporated the principles of the EPC and its protocols. These
developments are strictly of little legal consequence to non-EC countries but
in practice, since courts of other jurisdictions look to the UK and continental
courts for guidance, they impact on others.215 Of importance is the fact that
the EPC attempted to eliminate the perceived difference of interpretation
between the civil systems and the common-law systems.
215 Adam Bobker, Patent Litigation in Canada – The Use of the Protocol Questions in Light of Lord Hoffman’s Decision in
Kirin-Amgen v. Hoeschst Marion Roussel Lt” 85 Canadian Bar Review.
216 Divided by a common language: a comparison of patent claim interpretation in the English and US courts [2004] EIPR 528.
217 The November 2000 Protocol provides in respect of equivalents in Art. 2 as follows: “For the purpose of determining the
extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to
an element specified in the claims.” It is not yet in force.
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Neither should it be interpreted in the sense that the claims serve only
as a guideline and that the actual protection conferred may extend
to what, from a consideration of the description and drawings by a
person skilled in the art, the patentee has contemplated.
The UK Patents Act incorporated these provisions in Article 125 in these terms:
26. The three-stage English Improver inquiry: The English courts interpret
the Protocol as imposing a three-stage approach to claim construction. This
approach is, however, simply a matter of convenience and does not apply
in all instances.
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■■ Does the variant have a material effect upon the way the
invention works? If yes, the variant is outside the claim. If no –
■■ Would this (i.e. that the variant had no material effect) have been
obvious at the date of publication of the patent to a reader skilled
in the art? If no, the variant is outside the claim. If yes –
■■ Would the reader skilled in the art nevertheless have understood
from the language of the claim, that the patentee intended
that strict compliance with the primary meaning was an
essential requirement of the invention? If yes, the variant is
outside the claim.
218 The questions here stated are as formulated (translated) by Axel von Hellfeld Patent Infringement in Europe, the British
and the German Approach to Claim Construction or Purposive Construction versus Equivalency a lecture presented at the
IPTA European Masters Course Melbourne and Sydney, March 2007.
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EPILADY
IEPT19920220,
Court of The Hague [The Netherlands]
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The advice of the expert indicates, among other things, how in the
department’s opinion, Dutch experts view the scope of the patent’s
protection. On the basis of that advice, of the obviousness of the
mechanical equivalence in the said circumstances and of the fairness
referred to in the second sentence, of which third parties ought to take
account in their expectations, the court takes the view that third parties
ought to realize that the term “coil spring” in the patent claims merits
such abstraction that a device such as Remington’s is covered by the
patent’s scope of protection. [Translated from Dutch.]
In any event, the outcome of the Epilady litigation showed that different
courts construed the same claims differently. No infringement was found
in England, but otherwise in Germany and the Netherlands.
29. The final word? The final word may now have been spoken in the UK
on the approach to patent interpretation. In Kirin-Amgen Inc v Hoechst
Marion Roussel Ltd [2004] UKHL 46, Lord Hoffman reviewed in great detail
the history of and rationale behind patent interpretation. It is a lengthy
judgment, encyclopedic and, although basically a restatement, worthwhile
reading. The extracts that follow do not do justice to the judgment.
The facts: The patent, owned by Amgen, dealt with the production of EPO,
a very successful anemia drug. Although the protein was known, the patent
covered the production of the EPO using genetic engineering techniques
to express exogenous DNA in host cells. The defendant, TKT, developed a
separate technique for producing EPO by inserting an inducible promoter
sequence upstream of the endogenous EPO gene in human cell lines. The
claim of Amgen’s patent under consideration covered the production of the
EPO protein through expression of an exogenous DNA sequence in a host
cell. Amgen argued that the host cell simply had to host exogenous DNA
which included the TKT introduced promoter sequence. On the other hand,
TKT argued for a narrower claim interpretation that the exogenous DNA
covered by the claim could only be an exogenous EPO gene.
219 These headings have been added in order to highlight the different points made in the judgment.
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Until the Patents Act 1977, which gave effect to the European Patent
Convention (‘EPC’) there was nothing in any UK statute about the
extent of protection conferred by a patent. It was governed by the
common law, the terms of the royal grant and general principles of
construction. But the EPC and the [1977] Act deal expressly with the
matter in some detail.
Although the EPC thus adopted the United Kingdom principle of using
the claims to determine the extent of protection, the Contracting
States were unwilling to accept what were understood to be the
principles of construction which United Kingdom courts applied in
deciding what the claims meant. These principles were perceived as
having sometimes resulted in claims being given an unduly narrow
and literal construction. The Contracting Parties wanted to make
it clear that legal technicalities of this kind should be rejected. On
the other hand, it was accepted that countries which had previously
looked to the ‘essence of the invention’ rather than the actual terms
of the claims should not carry on exactly as before under the guise of
giving the claims a generous interpretation.
On the other hand, if the language of the claim “in itself” was
ambiguous, capable of having more than one meaning, the court
could have regard to the context provided by the specification and
drawings. If that was insufficient to resolve the ambiguity, the
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These rules, if remorselessly applied, meant that unless the court could
find some ambiguity in the language, it might be obliged to construe
the document in a sense which a reasonable reader, aware of its context
and background, would not have thought the author intended.
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(g) [Purposive construction does not extend the meaning of the words]
At the time when the rules about natural and ordinary meanings
were more or less rigidly applied, the United Kingdom and
American courts showed understandable anxiety about applying
a construction which allowed someone to avoid infringement by
making an “immaterial variation” in the invention as described in
the claims. In England, this led to the development of a doctrine
of infringement by use of the “pith and marrow” of the invention
as opposed to a “textual infringement”.
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(k) [The Catnic and Improver questions are merely guidelines to interpretation]
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30. Germany is also bound by the EPC and the Protocol. It is here used
to illustrate the approach to interpretation by a country with a civil-law
background. For this purpose a judgment of an English court by Laddie J
will be used. It was a license case and the English court had to establish the
scope of a patent under German law.
The current German law, like ours, seeks to implement the provisions
of Art. 69 EPC and the Protocol. It would not be safe to assume that
the outcome of applying the German approach would, in all cases,
be the same as the outcome under our domestic law.
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“In contrast to the legal situation until 1978, the claims are not
now merely the starting point but rather the essential basis for
determining the extent of protection. Under the Patent Law 1981,
the terms of the claim have to be determined by interpretation,
taking the description and drawings into consideration. As
the Protocol shows, the interpretation does not only serve the
purpose of resolving an ambiguity found in the claims but also
of clarifying the technical terms used in the claims as well as the
limits and bounds of the invention described therein”
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Before considering that case law, one general point should be made.
Under German law, as under English law, it is for the court to construe
the patent and to decide the issue of infringement. In doing that it
must view the patent through the eyes of the notional skilled, but
uninventive, addressee.
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Thus the German courts take into account the fact that figures and
dimensions are, or are capable of being, used to delimit the scope of
protection. On the other hand, the way they are interpreted depends
upon the context in which they are used. Furthermore, the BGH
went on to explain that, because of their ability to be precise, figures
and dimensions are different to mere verbal descriptions:
“These factors alone prevent the person skilled in the art always
ascribing the same fixed meaning to specifications of figures,
dimensions or ranges. However, as a rule, he will attach a higher
degree of certainty and clarity to such details than to verbal
descriptions of the elements of the teaching according to the
invention [citation omitted]. Figures as such are unambiguous,
while general concepts formulated in linguistic terms constitute
a certain degree of abstraction from the object to which they
refer. In addition, such concepts, if used in a patent specification,
need not necessarily be used in the meaning attached to
them by general technical linguistic usage; in this sense the
patent specification can constitute its ‘own lexicon’. From the
vantage point of the reader skilled in the art, the features given
concrete form by means of the specification of figures and
dimensions may be interpreted such that the objective success
to be achieved according to the invention is determined more
precisely and, where appropriate, more narrowly than would be
the case for a purely verbal description. Since it is the applicant’s
responsibility to ensure that everything is contained in the patent
claim for which he requests protection, the reader of the patent
specification is entitled to assume that this requirement has also
been satisfied through the inclusion of figures in the wording of
the patent claims. This applies all the more in that the applicant
who specifies figures has particular occasion to be fully aware of
the consequences of the wording of the claims for the limits of
the patent protection requested.”
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It will be seen that, as under English law, the German courts have to take
into consideration the fact that the language of the claim is the patentee’s
choice and that the reader is entitled to assume that he knew what he
was doing when seeking to define the monopoly he was seeking.
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The applicant will not always recognize and exhaust the entire
technical contents of the invention; irrespective of the question
whether this is legally possible, he is not obliged by law to do
so. If, when observed objectively, the patent is restricted to
a narrower wording of the claim than would be appropriate
according to the technical content of the invention, and thus
compared with the state of the art, the specialist in the field is
entitled to rely on the fact that protection is correspondingly
restricted. The patent holder is then prevented from
subsequently claiming protection for something he has not
placed under protection. The same applies even if the person
skilled in the art realizes that the effect of the invention as
such (in the narrower case discussed above) could be achieved
beyond the range protected in the patent claim.”
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covered by the patent if the reader would conclude from the teaching
of the patent that the inventor intended not to cover such variants.
In its Plastic Pipe judgment, the BGH confirmed that this is essentially
the same as the third Improver question:
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material. The person skilled in the art, who would not infer from the
patent document that – as opined by the defendants – parts of the
description ought to have been deleted, would understand the text
references concerned as explanation of the protected subject matter
and attempt to bring them into a meaningful context, in which there
were no contradictions.
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31. The Japanese approach: The courts of Japan have a somewhat different
approach.
Positive Tests:
Test 1: Such different part is not an essential part of the patented
invention (non-essentiality).
Test 2: Even if such different part is interchanged with a part of
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Negative Tests:
Test 4:. The accused device was not the same as publicly known
art at the time of filing the application, or could not have been
easily conceived by a person skilled in the art based on the
publicly known art at the time of filing the application (exclusion
of publicly known art).
Test 5: There is no special circumstance such as where the accused
device was intentionally excluded during the prosecution of the
patent application (file wrapper estoppel).
32. Comment: In its Case Book of Intellectual Property Rights (1) 2003, the
Japan Patent Office Asia-Pacific Industrial Property Centre commented on
these tests in these terms:
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The Supreme Court held that a technology that has been publicly
known at the time of filing the patent application or could have been
easily invented by a person skilled in the art based on such publicly
known technology at the time of filing is not patentable (Article 29),
and that such technology should naturally belong to public domain
properties and should not be monopolized. This is the reason that
under Test 4 patent-free publicly known technology is an affirmative
defense. This test does not mean that the patented invention
could be easily conceived but rather that the patent right cannot be
enforced with respect to a product that is easily obtainable from the
prior art at the time of filing an application for patent.
The Supreme Court for the first time held that the application of the
doctrine of equivalents is prevented by file wrapper estoppel. The
Supreme Court stated that if the applicant intentionally excluded
an accused product from the scope of the claims, or acknowledged
that the accused product does not fall within the scope of the claims
during the prosecution of the patent application, then the patentee
is precluded from later asserting his claims against the accused
product in a manner contrary to or inconsistent with his earlier
acknowledgement.
L. US LAW ON EQUIVALENTS
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605 (1950). The main cause of the difference is the fact that, in the USA,
the patent as granted is not the exclusive memorial of the scope of the
patent protection, and that extrinsic evidence relating to the prosecution
history is admissible in order to interpret the specification and claims.222 This
rule, which is not accepted in other common-law countries, gave rise to
the concept of prosecution history or file-wrapper estoppel (argument and
amendment estoppel). These matters were the subject of later Supreme
Court judgments in Warner-Jenkinson v Hilton Davis 520 US 17 (1996) and
Festo Corporation v Shoketsu Kinzoku Kogyo Kabushiki Co 122 S Ct 1831
(2002). Because of the limited application of these principles, the basics
only will be set out.
To allow such extrinsic evidence for the purpose of defining the monopoly
would undermine the public notice function of the claims, and increase
uncertainty as well as fuelling the already overheated engines of patent
litigation. The current emphasis on purposive construction, which keeps
the focus on the language of the claims, seems also to be inconsistent
with opening the Pandora’s Box of file wrapper estoppel.
The facts: Because of the terms of a license agreement, the English court
was called upon to decide the scope of a patent with reference to US law.
The judgment by Jacob J provides a useful insight from the vantage point
of an outsider. It went on appeal (Celltech Chiroscience Ltd v Medimmune
Inc [2003] EWCA Civ 1008 (17 July 2003)) where the principles were also
discussed. For present purposes the judgment of Jacob J will suffice.
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“After all aids to interpretation have been exhausted and the scope
of the claims has been enlarged as far as words can be stretched,
on proper occasions courts make them cover more than their
meaning can bear. If they applied the law with inexorable rigidity,
they would never do this. [But] at times they resort to the doctrine
of equivalents to temper unsparing logic and prevent an infringer
from stealing the benefit of the invention.”
The US also has a further doctrine of patent law going by the name
of “prosecution history (colloquially ‘file wrapper’) estoppel”. This
rule is based on the broad notion that a patentee may not go back
on anything he has said or represented to the United States Patent
and Trademark Office in the course of prosecution of his patent.
“We do, however, share the concern of the dissenters below that
the doctrine of equivalents, as it has come to be applied since Graver
Tank, has taken on a life of its own, unbounded by the patents
claims. There can be no denying that the doctrine of equivalents,
when applied broadly, conflicts with the definitional and public-
notice functions of the statutory claiming requirement.”
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The reining in was achieved by adopting the solution of the late Judge
Helen Nies in the CAFC. Justice Thomas expressed the modern rule thus:
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INDUSTRIAL
DESIGNS
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309
INDUSTRIAL DESIGNS
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■■ new or224
■■ original (i.e. independently created).
It may, in certain jurisdictions such as the UK, not involve a method or principle
of construction, and any feature which is necessitated solely by the function
which the article is intended to perform is not entitled to design protection.
311
INDUSTRIAL DESIGNS
■■ is new; and
■■ has individual character.
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A design patent protects only the appearance of the article and not
structural or utilitarian features.
8. The overlap between designs and copyright: Many works that are
entitled to design rights are, simultaneously, entitled to copyright, something
recognized in the Community designs Regulation:
227 Art. 11(1) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs.
228 Art. 12 of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs.
229 http://www.uspto.gov/web/offices/com/iip/pdf/brochure_05.pdf. See further: Egyptian Goddess, Inc. v Swisa Inc., 543
F.3d 665 (Fed. Cir. 2008).
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INDUSTRIAL DESIGNS
the date on which the design was created or fixed in any form. The
extent to which, and the conditions under which, such a protection
is conferred, including the level of originality required, shall be
determined by each Member State230.
This has given rise to practical problems, something recognised in the second
sentence quoted, because it means that spare or body parts of motor vehicles
may be protected for a minimum of 50 or 70 years, something many laws
consider to be unacceptable.
The law in Singapore, for example, states that the making of any useful
article in three dimensions does not infringe the copyright in an artistic work
if, when the useful article or reproduction is made, the artistic work has
been industrially applied at any time before the useful article or reproduction
is made. An artistic work is applied industrially if, for instance, more than 50
reproductions in three dimensions are made of it, for the purposes of sale
or hire; and a useful article means an article having an intrinsic utilitarian
function that is not merely to portray the appearance of the article or to
convey information.
The South African Copyright Act provides that the copyright in an artis-
tic work of which three-dimensional reproductions were made available,
whether inside or outside the country, to the public by or with the consent
of the copyright owner are not infringed if any person without the consent
of the owner makes or makes available to the public three-dimensional re-
productions or adaptations of the authorized reproductions, provided these
reproductions primarily have a utilitarian purpose and are made by an indus-
trial process.
230 Art. 96(2) of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs.
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315
INDUSTRIAL DESIGNS
The registered design and the earlier mark are visually similar […].
Phonetically, the marks are identical […]. Conceptually, the signs
are identical […]. In their overall impression, the signs are similar.
[…] [It] is conceivable that when the public encounters the logo, the
subject of the contested RCD applied to products, their packaging
or their get up, it will perceive that logo as an indication of the
commercial origin of the products in question and not as a pure
embellishment. Consequently, the contested RCD is liable to
jeopardise the guarantee of origin which constitutes the essential
function of the respondent’s trade mark. The presence of the other
elements in the contested RCD will not prevent the likelihood of the
relevant public in the relevant Member States taking the products
marketed with the appellant’s logo as a line of products originating
from the respondent undertaking or an undertaking economically
connected to the respondent undertaking.
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And the most important thing about each of these is what they look
like. Of course parties and judges have to try to put into words why
they say a design has “individual character” or what the “overall
impression produced on an informed user” is. But “it takes longer
to say than to see” as I observed in Philips v Remington [1998] RPC
283 at 318. And words themselves are often insufficiently precise
on their own.
It follows that the design history of the P&G design, and whether
Reckitt copied was irrelevant.
The starting point for any discussion of the law of design patents
is the Supreme Court’s decision in Gorham Co. v. White, 81 U.S.
511, 20 L. Ed. 731 (1871). That case involved a design patent
for the handles of tablespoons and forks. In its analysis of claim
infringement, the Court stated that the test of identity of design
“must be sameness of appearance, and mere difference of lines
317
INDUSTRIAL DESIGNS
The Gorham Court then set forth the test that has been cited in
many subsequent cases: “[I]f, in the eye of an ordinary observer,
giving such attention as a purchaser usually gives, two designs are
substantially the same, if the resemblance is such as to deceive such
an observer, inducing him to purchase one supposing it to be the
other, the first one patented is infringed by the other.” 81 U.S. at
528. In the case before it, the Court concluded that “whatever
differences there may be between the plaintiffs’ design and those
of the defendant in details of ornament, they are still the same in
general appearance and effect, so much alike that in the market
and with purchasers they would pass for the same thing — so much
alike that even persons in the trade would be in danger of being
deceived.” Id. at 531.
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The “informed user” test makes sense: a user who has experience
of other similar articles will be reasonably discriminatory – able to
appreciate enough detail to decide whether a design creates an
overall impression which has individual character and whether an
alleged infringement produces a different overall impression.
It follows that the informed user is not the same as the “average
consumer” of trade mark law. The informed user of design law is
more discriminating. Whilst I do not say that imperfect recollection
has no part to play in judging what the overall impression of design
is, it cannot be decisive. I would say that what matters is what
strikes the mind of the informed user when it is carefully viewed.
319
INDUSTRIAL DESIGNS
KWANG YANG MOTOR CO LTD v OHIM AND HONDA GIKEN KOGYO KABUSHIKI
KAISHA
General Court, 9 September 2011, T-11/08 [EU]
However, that factor does not imply that the informed user is able
to distinguish, beyond the experience gained by using the product
concerned, the aspects of the appearance of the product which are
dictated by the product’s technical function from those which are
arbitrary […].
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SHENZHEN TAIDEN INDUSTRIAL CO. LTD v OHIM AND BOSCH SECURITY SYSTEMS BV
General Court, 22 June 2010, T-153/08, ECR 2010, II-2517 [EU]
Once one has identified the notional “informed user” correctly and
what he would know about the design corpus, one asks whether
the accused product produces “a different overall impression” to
such a person?
321
INDUSTRIAL DESIGNS
■■ For the reasons I have given above, the test [in the infringement
context] is different not clearly different.
■■ The notional informed user is fairly familiar with design issues, as
discussed above.
■■ Next is not a proposition of law but a statement about the way
people (and thus the notional informed user) perceive things. It
is simply that if a new design is markedly different from anything
that has gone before, it is likely to have a greater overall visual
impact than if it is surrounded by kindred prior art.
■■ On the other hand it does not follow, in a case of markedly new
design (or indeed any design) that it is sufficient to ask “is the
alleged infringement closer to the registered design or to the
prior art”, if the former infringement, if the latter not. The test
remains: is the overall impression different?
■■ It is legitimate to compare the registered design and the alleged
infringement with a reasonable degree of care. The court
must “don the spectacles of the informed user” to adapt the
hackneyed but convenient metaphor of patent law. The possibility
of imperfect recollection has a limited part to play in this exercise.
■■ The court must identify the overall impression of the registered
design with care. True it is that it is difficult to put into language,
and it is helpful to use pictures as part of the identification, but
the exercise must be done.
■■ In this exercise the level of generality to which the court must
descend is important. Here, for instance, it would be too general
to say that the overall impression of the registered design is
“a canister fitted with a trigger spray device on the top.” The
appropriate level of generality is that which would be taken by
the notional informed user.
■■ The court should then do the same exercise for the alleged
infringement.
■■ Finally the court should ask whether the overall impression of
each is different. This is almost the equivalent to asking whether
they are the same – the difference is nuanced, probably, involving
a question of onus and no more.
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[…] [In] the case of a design registered in a Member State, the scope
of the protection conferred by a design is to include any design
which does not produce on the informed user a different overall
impression and that, in assessing the scope of that protection, the
degree of freedom of the designer in developing his design is to be
taken into consideration.
231 The appeal against this judgment was dismissed: Judgment of the Court (Fourth Chamber) of 20 October 2011 —
PepsiCo, Inc., v GrupoPromer Mon Graphic SA, Office for Harmonisation in the Internal Market (Trade Marks and
Designs)(Case C-281/10 P)
323
INDUSTRIAL DESIGNS
The first issue centres round Azure’s contention that Landor’s claim
for UKUDR [UK Unregistered Design Right] in the Expander Design is
precluded by s 213(3)(a) of the Copyright, Designs and Patents Act
1988 which provides as follows:
324
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325
326
UNFAIR COMPETITION:
INTRODUCTION
CHAPTER XIV
327
UNFAIR COMPETITION: INTRODUCTION
A. INTERNATIONAL STANDARDS
It has often been said that competition is the life blood of commerce.
It is the availability of the same, or similar, products from more than
one source that results in the public paying a reasonable price therefor.
Hence competition as such cannot be unlawful, no matter to what
extent it injures the custom built up by who first marketed a particular
product or first ventured into a particular sphere of commerce.
Article 10bis:
232 Eg the Australian Trade Practices Act 1974 (Cth). Cf Taco Company Of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR
177; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.
328
CHAPTER 14
B. CIVIL-LAW SYSTEMS
233 Civil countries have, obviously, their own different laws. Cf Frauke Henning-Bodewig and Gerhard Schricker “New
initiatives for the harmonisation of unfair competition law in Europe” [2002] EIPR 271.
329
UNFAIR COMPETITION: INTRODUCTION
4. Japanese law: Japanese law is more specific and defines the activities
that amount to unfair competition in these terms:234
330
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331
UNFAIR COMPETITION: INTRODUCTION
332
CHAPTER 14
5. The common law does not recognize a general tort: English common
law does not recognize a general unfair competition tort.235 Instead, it
recognizes torts that cover some of the field, the important ones being
236
passing off and the protection of confidential information.237
The first and second of the above uses of the phrase are liable to be
misleading in that they may wrongly imply that the relevant action
235 Cf. Andrew D. Murray “A distinct lack of goodwill” [1997] EIPR 345; Australian Broadcasting Corp v Lenah Game Meats
Pty Ltd [2001] 185 HCA 63.
236 For the sake of consistency, the hyphenated “passing-off” is not used.
237 For others see Douglas & Ors v. Hello! Ltd & Ors [2007] UKHL 21 (2 May 2007).
333
UNFAIR COMPETITION: INTRODUCTION
334
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335
336
UNFAIR COMPETITION:
PASSING OFF
CHAPTER XV
A. INTRODUCTION (1-5)
F. MISREPRESENTATION (19-24)
G. REPUTATION (25-29)
L. OVERLAPPING (36-37)
337
UNFAIR COMPETITION: PASSING OFF
A. INTRODUCTION
In the Amex case,239 American Express sought to prevent the use of the
mark Amex by the defendant in relation to foreign exchange transactions.
American Express never used Amex as a trademark or trade name but
everyone associated the name Amex with American Express. The Court
upheld the claim. Importantly, it considered the fact that the defendant
could not show that it had been using Amex in good faith and without the
object of competing unfairly as significant.
The third case to which reference will be made is the Manpower case.240 The
plaintiff used as the essential part of its trade name the word “Manpower”.
The defendant used, as the essential part of its trade name, the term
“Woman Power”. The court found that it was likely that customers would
believe that there was a trade association between the two firms and that
causing such a misunderstanding amounted to unfair competition.
2. The basis of the action is that the passing off injures the right to
goodwill of a business:
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the passing off injures the right of property in the plaintiff, that right
of property being his right to the goodwill of his business.241
WILLIAM GRANT AND SONS LTD v. GLEN CATRINE BONDED WAREHOUSE LTD
[1999] ScotCS 58 [Scotland]
There are two types of passing off, namely the classic form and the
extended form.
241 From Salmond on Torts quoted with approval in Ciba-Geigy Canada v Apotex Inc 1992 CanLII 33 (SCC).
339
UNFAIR COMPETITION: PASSING OFF
242 Katherine Saunders “Choccosuisee – the new ‘extended extended’ passing off” [2001] VUWLRev 13.
243 Cf. J Bollinger v The Costa Brava Wine Co Ltd (No 1) [1960] Ch 262, [1960] RPC 16 and (NO 2) [1961] 1 WLR 277, [1961]
RPC 116 [UK].
244 Cf. Erwen Warnick BV v Townend & Sons (Hull) Ltd [1979] AC 731 (HL) [Advocaat].
340
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Extended passing off differs from classic passing off in two key
respects. First, as a misrepresentation of origin is not required [as]
it protects traders as a class rather than as individuals. Second, it
protects descriptive terms. This does not give monopoly rights in the
descriptive term because only incorrect application of the term can
be prevented.”245
5. The difference between the classic and the extended forms described:
The facts: The dispute between the parties arose out of the introduction by
Cadbury of a new chocolate bar under the name SWISS CHALET. The words
SWISS CHALET appeared on the package sleeve in large gold-rimmed red
letters, with a picture of a snow-capped mountain – plainly intended to be
identified as the Matterhorn – and an alpine chalet in the valley below. The
package sleeve bore the word CADBURY in the familiar script format; and
the familiar Cadbury “glass and a half” logo to indicate milk chocolate. The
chocolate was neither made in Switzerland nor was it made according to the
typical Swiss method.
The court in the first instance found that Cadbury had been passing off its
chocolate as of Swiss origin and that this infringed the rights of Swiss-based
manufacturers of chocolate who had played a major role over the years in the
development of the art and technology of chocolate making. An injunction
was granted and the judgment upheld on appeal.246
Laddie J:
245 Katherine Saunders “Choccosuisee – the new ‘extended extended’ passing off” [2001] VUWLRev 13.
246 Chocosuisse Union v Cadbury Ltd [1999] EWCA Civ 856; [1999] RPC 826 (CA).
247 Erwen Warnick BV v Townend & Sons (Hull) Ltd [1979] AC 731 (HL).
341
UNFAIR COMPETITION: PASSING OFF
done so. He can not succeed if he has just entered the market and
not built up the necessary goodwill.
The fact that the extended form of action can, in the correct
circumstances, protect descriptive words is of significance for a
248 J Bollinger v The Costa Brava Wine Co Ltd (No 1) [1960] Ch 262, [1960] RPC 16 and (No 2) [1961] 1 WLR 277, [1961]
RPC 116.
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(f) [The extended action protects accuracy and exclusivity of the descriptive term]
B. GEOGRAPHICAL INDICATIONS
343
UNFAIR COMPETITION: PASSING OFF
249 For an extended application of the principles see the Chocosuisse Union v Cadbury Ltd cases mentioned earlier.
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The tort of passing off is but one of the greatly differing contexts
in which the courts have been called on to define and identify
the nature of goodwill. The injuries against which the goodwill is
protected in a passing off suit are not limited to diversion of sales by
any representations that the goods or services of the defendant are
those of the plaintiff. In S p a l d i n g itself, the misrepresentation
was that one class of the plaintiff’s goods was another class. In
more recent times there has been development both in the nature
of the “goodwill” involved in passing off actions and in the range
of conduct which will be restrained. In Moorgate Tobacco, Deane J
spoke with evident approval of:
12. Reputation and its date: In the case of passing off, the plaintiff must
prove a reputation in the mark or get-up and the reputation of the claimant
must exist at the time the respondent enters the market. In trademark
infringement proceedings, the plaintiff’s reputation is irrelevant.
250 See also Playboy Enterprises v Bharat Malik 2001 PTC 328 [India].
345
UNFAIR COMPETITION: PASSING OFF
The differences can best be illustrated by two cases between the same parties
in the same court. In the first, mentioned in a previous chapter, the court found
that there was no infringement of the trademark ROMANY CREAMS by the use
of ROMANTIC DREAMS, in spite of the similar trade dress. The second, dealing
with TENNIS biscuits, concerned trade dress and the court found infringement.
14. Goodwill and reputation: The general rule relating to location in the UK
and some other common-law jurisdictions is that the business of the plaintiff
must consist of or include selling in the jurisdiction a class of goods to which
the particular trade name applies. This is based on what some regard as a
confusion between goodwill and reputation.
346
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347
UNFAIR COMPETITION: PASSING OFF
251 Tan-Ichi Company Ltd v Jancar Ltd [1990] F.S.R. 151 (HC).
252 William Grant & Sons Ltd v McDowell & Co Ltd [1994] F.S.R. 690 [India]; Jolen Inc v Doctor & Co 2002 (25) PTC 29 (Delhi);
Ziff-Davis v Jain 1998 PCT (18) 739 (Delhi).
348
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349
UNFAIR COMPETITION: PASSING OFF
350
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anywhere in the world does not mean, for trade mark purposes,
that the law should regard them as being used everywhere in
the world.”
WARNINK v TOWNEND
[1980] RPC 31
■■ a misrepresentation
■■ made by a trader in the course of trade
■■ to prospective customers of his or ultimate consumers of goods
or services supplied by him,
■■ which is calculated to injure the business or goodwill of
another trader (in the sense that this is a reasonably foreseeable
consequence), and
■■ which causes actual damage to a business or goodwill of the
trader by whom the action is brought or (in a quia timet action)
will probably do so.’
F. MISREPRESENTATION
254 Scotland: William Grant and Sons Ltd v Glen Catrine Bonded Warehouse Ltd [1999] ScotCS 58; Australia: Fletcher
Challenge Ltd v Fletcher Challenge (Pty) Ltd [1982] FSR 1; Canada: Kirkbi Ag v Ritvik Holdings Inc 2005 SCC 65.
351
UNFAIR COMPETITION: PASSING OFF
20. Confusion and causation: Confusion, per se, is not actionable.255 The
confusion must be caused by the defendant’s misrepresentation.
255 Also County Sound v Ocean Sound Ltd [1991] FSR 367.
256 Halsbury’s Laws of England 4ed vol 48 par 153 quoted with approval in Hoechst Pharmaceuticals (Pty) Ltd v The Beauty
Box (Pty) Ltd 1987 (2) SA 600 (A).
257 On appeal: (1948) 65 RPC 242 (HL). The judgment quoted was reported belatedly.
352
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PHONES4U v PHONE4U.CO.UK
[2006] EWCA Civ 244 [UK]
353
UNFAIR COMPETITION: PASSING OFF
We do not think that the respondents have shown that there has
been any misrepresentation. We noted the evidence relating to
the survey results show that there were members of the public
who thought the two businesses were related. But in the nature of
things some such misconception would be inevitable when you have
two businesses adopting a similar descriptive term as a part of their
names. Given a little time the public will be able to distinguish, now
that the two businesses are operating side-by-side. Otherwise, it
would amount to granting a monopoly to the person who happens
to use that descriptive term first.
354
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appellants. In such an action the test is whether there is a real risk that
the defendant’s representation would deceive a substantial number of
persons of the relevant section of the public into believing either that
the goods or services of the defendant are those of the plaintiff or that
there is a business connection between the plaintiff and the defendant
in relation to the goods or services provided by them.
23. Onus: The plaintiff must allege and prove a misrepresentation by the
defendant. The test applied to determine whether a misrepresentation
amounts to passing off is whether there is a reasonable likelihood that
members of the public may be confused into believing that the business of
one person is, or is connected with, that of another. Such representation
must be false and unauthorized. The typical case of passing off is where
the defendant uses, adopts or imitates the trade name or get-up of the
plaintiff’s business, goods or services.
■■ The nature of the marks i.e. whether the marks are word marks or
label marks or composite marks, i.e. both words and label works.
■■ The degree of [resemblance] between the marks, phonetically
similar and hence similar in idea.
■■ The nature of the goods in respect of which they are used as
trademarks.
■■ The similarity in the nature, character and performance of the
goods of the rival traders.
■■ The class of purchasers who are likely to buy the goods bearing
the marks they require, on their education and intelligence and
a degree of care they are likely to exercise in purchasing and/or
using the goods.
■■ The mode of purchasing the goods or placing orders for the
goods, and
■■ Any other surrounding circumstances which may be relevant in
the extent of dissimilarity between the competing marks.
355
UNFAIR COMPETITION: PASSING OFF
G. REPUTATION
25. Proof of reputation: It is necessary to allege and prove that the trade
name, trademark, get-up or service mark was known in the market and
that the plaintiff’s goods, business or service acquired a public reputation
or became distinctive from other, similar goods, businesses or services.
Consequently, where a trader uses a word in its ordinary meaning in
connection with her or his goods or business, or uses a trade or service
mark or trade name, which is a descriptive term, it must be proved that,
through use, such word acquired a secondary meaning and designates
the plaintiff’s goods, services or business. Where, however, a trader uses
a fancy or invented name, it is difficult to avoid an inference of passing
off if a rival uses that name.
26. When reputation must exist: The reputation relied upon must have
been in existence at the time the defendant entered the market, in other
words, a plaintiff cannot rely on a reputation that overtook the business of
the defendant.258 It must also exist when the misrepresentation is committed,
and the plaintiff cannot rely on a past reputation.259
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“in the sense that by the use of (the plaintiff’s) name or mark,
etc., in relation to goods they are regarded by a substantial
number of members of the public or in the trade, as coming
from a particular source known or unknown”
In that case it was held that the peculiarly shaped three pinch
decanter or “dimple” bottle had become associated with the Dimple
Haig Whisky blended and marketed by the petitioning company.
Again, in Coca-Cola Co v Barr AG and Co Ltd [1961] RPC 387, it was
considered that the petitioners had made out a prima facie case that
their bottle (which had a waist, carried no label and had fluting) was
distinctive of their product Coca-Cola.
357
UNFAIR COMPETITION: PASSING OFF
The plaintiff must show more than mere prior use by him of the
particular get-up. He must show that the get-up has become in
the mind of the public distinctive of one particular trader and no
other trader; so that the get-up has come to mean, to the public,
a product coming from a particular commercial source. They, the
public, do not have to know the name of the trader. But it has to
be shown that the product is, in the minds of individual members
of the public who are buyers or potential buyers of the goods, the
product of that manufacturer ‘with whom I have become familiar’.
That is the test. The property arising from that reputation must
be actual, proven goodwill in the mind of the public towards the
owner of the reputation. The ownership of that reputation must
be proved.
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Now, while it is perfectly true that in the end the question is whether
there is a passing off, an allegation of fraud is not so lightly flicked
aside. Our courts, like the English courts, have frequently pointed to
the pertinence of the enquiry.
Deception is the gist of the tort of passing off, but it is not necessary
for a plaintiff to establish that the defendant consciously intended
to deceive the public if that is the probable result of his conduct.
Nevertheless, the question why the defendant chose to adopt a
particular name or get up is always highly relevant. It is a question
which falls to be asked and answered. If it is shown that the defendant
deliberately sought to take the benefit of the plaintiff’s goodwill for
himself, the court will not be astute to say that he cannot succeed in
doing what which he is straining every nerve to do.
359
UNFAIR COMPETITION: PASSING OFF
360
CHAPTER 15
33. Shape and configuration: A case of passing off may be made out
based on the shape or configuration of the article concerned. The use of
trademarks or other features may exclude the likelihood of deception or
confusion arising from the use of a similar get-up or feature. But this will
not necessarily follow from the use of different names. It will always be a
factual question.
The distinction between the design of an article and its get-up is clear
enough in principle, but oftentimes its application in particular cases
will present questions of nicety and difficulty.
361
UNFAIR COMPETITION: PASSING OFF
35. Common field of activity is not required: It is not a requirement that the
parties should have been involved in the same field of activity although the
fact whether or not they are may be of major consequence.
L. OVERLAPPING
An act of passing off may overlap with other types of unlawful competition
such as contravention of a statutory provision as in a Counterfeit Goods Act,
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Merchandise Marks Act or a Trade Descriptions Act. Where that is the case
the plaintiff may base the claim in the alternative on a contravention of the
relevant statute.
37. Limits to overlapping. One should beware of confusing passing off and
the general cause of action of unlawful competition.
363
364
UNFAIR COMPETITION:
CONFIDENTIAL INFORMATION
CHAPTER XVI
G. SPRINGBOARD (11)
H. REMEDIES (12)
365
UNFAIR COMPETITION: CONFIDENTIAL INFORMATION
This cause of action has now firmly shaken off the limiting constraint of
the need for an initial confidential relationship. In doing so it has changed
its nature. Now the law imposes a ‘duty of confidence’ whenever a
person receives information he knows or ought to know is fairly and
reasonably to be regarded as confidential. Even this formulation is
awkward. The continuing use of the phrase ‘duty of confidence’ and
the description of the information as ‘confidential’ is not altogether
260 For the judgment of the House of Lords on appeal: Douglas v Hello! Ltd [2007] UKHL 21 (2 May 2007).
366
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B. MIXED-LAW APPROACH
C. CIVIL-LAW APPROACH
367
UNFAIR COMPETITION: CONFIDENTIAL INFORMATION
D. EMPLOYER-EMPLOYEE RELATIONSHIP
368
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369
UNFAIR COMPETITION: CONFIDENTIAL INFORMATION
[W]hat are trade secrets and how do they differ (if at all) from
confidential information? [Counsel] suggested that a trade secret is
information which, if disclosed to a competitor, would be liable to
cause real (or significant) harm to the owner of the secret. I would
add first, that it must be information used in a trade or business,
and secondly that the owner must limit the dissemination of it or
at least not encourage or permit widespread publication. That is
my preferred view of the meaning of trade secret in this context. It
can thus include not only secret formulae for the manufacture of
products but also, in an appropriate case, the names of customers
and the goods which they buy.”
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10. An employee is entitled to use and put at the disposal of new employers
all his acquired skill and knowledge:
G. SPRINGBOARD263
11. The object of the doctrine: The object of the springboard doctrine is
to prevent a person who has breached a duty to keep matters confidential
to capitalize on any head-start gained. The problems with this doctrine are
manifold, especially when it concerns the issue of an injunction.264
371
UNFAIR COMPETITION: CONFIDENTIAL INFORMATION
and springboard it remains even when all the features have been
published or can be ascertained by actual inspection by any member
of the public.
H. REMEDIES
12. The typical common-law remedies available for torts are available in
these cases and they are discussed in later chapters. As far as springboard
relief is concerned, an injunction in the following terms may be appropriate:265
372
EXHAUSTION
OF IP RIGHTS
CHAPTER XVII
A. INTRODUCTION (1-2)
373
EXHAUSTION OF IP RIGHTS
A. INTRODUCTION
1. The meaning of exhaustion of IP rights: Exhaustion of rights refers to
the instance when the holder of an IP right places products subject to such
a right in the distribution channels. The effect of this is that the IP right
relating to that product is thereby exhausted, and the act of purchasing,
using, repairing or selling the product cannot be an infringement of the
right.
ADAMS v BURKE
84 US 453 (1873) [USA]
When the patentee, or the person having his rights, sells a machine
or instrument whose sole value is in its use, he receives the
consideration for its use and he parts with the right to restrict that
use. That is to say, the patentee or his assignee having in the act
of sale received all the royalty or consideration which he claims for
the use of his invention in that particular machine or instrument, it is
open to the use of the purchaser without further restriction.
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“It seems that the United States courts and Japanese courts agree
in that the patentee cannot control the patent exhaustion by its
unilateral intention. However, the patentee can control the patent
exhaustion by a valid contract in the United States, as opposed to
the Japanese courts which do not allow the patentee to control the
patent exhaustion by contract, and [they] also [established] objective
standards to determine whether a patent is exhausted.”
266 Patent Exhaustion and the Recycling Business in the United States and Japan. www.law.washington.edu.
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EXHAUSTION OF IP RIGHTS
5. Third parties: Third parties are not bound by conditional sales unless
they had knowledge of the restriction.
It is the law that where the patentee supplies his product and at
the time of the supply informs the person supplied (normally via the
contract) that there are limitations as to what may be done with the
product supplied then, provided those terms are brought home first
to the person originally supplied and, second, to subsequent dealers
in the product, no licence to carry out or do any act outside the
terms of the licence runs with the goods.
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other ways. Once the goods are sold without a limited licence then
the purchaser buys them free of any patent restriction.
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EXHAUSTION OF IP RIGHTS
is covered by one set of claims does not give the person an implied
license to use the device in combination with other devices in which
the combination is covered by another set of claims.
With regard to LGE’s argument that exhaustion does not apply across
patents, we agree on the general principle: The sale of a device that
practices patent A does not, by virtue of practicing patent A, exhaust
patent B. But if the device practices patent A while substantially
embodying patent B, its relationship to patent A does not prevent
exhaustion of patent B.
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EXHAUSTION OF IP RIGHTS
380
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(i) the patented product is reused or recycled after it has finished its
service along with the lapse of its ordinary life as a product (Type 1);
(ii) a third party has made the patented product is reused or recycled
after it has finished its service along with the lapse of its ordinary life
as a product (Type 2).
(b) Since the patented product has not finished its service along with the lapse
of its ordinary life as a product its reuse or recycle by refilling is permitted.
In this case, the Type 1 condition has not been met. Since no physical
change or modification has been added to the components of the
products of Canon other than use of the filled ink, the products of
Canon can be reused as ink containers by refilling them with ink.
Ink is an interchangeable part, and refilling ink can be deemed to
be replacement of an interchangeable part. In the market of ink
products for ink jet printers, not only genuine products including
products of Canon but also recycled products and ink refills are
available. Though quality of recycled products is often inferior to
that of genuine products, they are widely accepted by users due to
lower prices. Furthermore, recycling should be encouraged for the
conservation of the environment unless it infringes upon another
party’s rights or interests. No laws or regulations prohibit the
recycling of used ink tanks. Given these factors, the Court finds that
the products of Canon have not spent their life as a product even
if the initial ink has been used up. The Court concludes that the
products of Canon do not meet the Type 1 condition.
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EXHAUSTION OF IP RIGHTS
(c) But the Type 2 condition is met in this case, and claim 1 has not been
exhausted because constituent features that are essential parts of the
invention were used.
(ii) the patent holder or patent licensee has assigned articles that
are to be used exclusively for the patented process or used for the
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The principle of territoriality has been dealt with earlier.268 What it means
is that a patent has only effect within the jurisdiction where it is registered.
This leads to the proposition that exhaustion of a patent in one country does
not exhaust a similar patent in another country. The scope of the two may
be different; and they may be held by unrelated parties.
267 Introduction to Intellectual Property Rights Japanese Patent Office Asia-Pacific Industrial Property Center, JIII; John W.
Osborne “Patent Exhaustion: a Standard Based on Patentable Distinctiveness” 20 Santa Clara Computer & High Tech. LJ
658.
268 See chapter XI part D above.
383
EXHAUSTION OF IP RIGHTS
BBS CASE
Japan Supreme Court
1 July 1997
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269 This case has survived legislative changes and has since been applied in South Africa: Protective Mining v Audiolens 1987
(2) SA 961 (A); Australia: R & A Bailey & Co Ltd v Boccaccio Pty Ltd 77 ALR 177; Canada : Kraft Canada Inc. v. Euro
Excellence Inc 2004 FC 652 (CanLII) ; and England : Revlon Inc v Cripps & Lee Ltd (1980) FSR 85 (CA). See, however,
Euro-Excellence Inc v Kraft Canada Inc 2007 SCC 37.
385
EXHAUSTION OF IP RIGHTS
13. The doctrine applies to the importation of grey goods (parallel importation):
Excluded from the definition of counterfeit goods are so-called parallel imports
or grey market goods, which are trademarked goods, legitimately manufactured
and sold in another country, and then imported into the local jurisdiction
without the trademark owner’s consent. The trademark on grey market goods
is not counterfeit because it was placed there by or with the consent of the
trademark owner, provided the goods were not subsequently modified or
remarked.270 The principles all assume that the same party holds the relevant IP
rights in both jurisdictions. If (for instance) they have been assigned to a third
party in one jurisdiction, the defense may not hold. Quite often the degree of
protection or lack of protection depends on local legislation.
270 See also Glaxo Group Ltd v Dowelhurst Ltd [2004] EWCA 290 Civ.
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14. The TRIPS Agreement does not address the issue of parallel imports:
The TRIPS Agreement simply says that none of its provisions, except those
dealing with non-discrimination (national treatment and most-favored-
nation treatment), can be used to address the issue of exhaustion of
intellectual property rights in a WTO dispute. In other words, even if a
country allows parallel imports in a way that another country might think
violates the TRIPS Agreement this cannot be raised as a dispute in the WTO
unless fundamental principles of non-discrimination are involved.
15. The effect of alterations: Can the defendant alter the trademarked goods
and still sell them under the owner’s trademark? This judgment held in the
negative. This would accord with the position in Singapore quoted above.
The facts: Sony manufactured video cassette recorders and is the proprietor
of the registered trademark “Sony” in respect of video cassette recorders. It
made different types of recorders for different countries because recorders
have to be compatible with the local television signal system. Thus, video
cassette recorders which were not designed specifically for the South African
system had to be adapted. The defendant imported Sony video cassette
387
EXHAUSTION OF IP RIGHTS
recorders designed for use in the UK. Before selling the machines, the
defendant had them adapted for use in South Africa. Sony alleged trademark
infringement, a claim that was upheld.
16. The “fortress Europe” exception. The European Economic Area has a
different approach: 271
I suppose nearly all members of the public would think that you
cannot infringe a trademark if you are just selling the genuine
goods of the proprietor to which he has applied his trademark.
Many (probably most) trademark lawyers think that ought to be the
rule. After all, trademarks are the badge of the owner, a sign by
which the consumer can know: ‘Here are the goods or services of
a particular owner. I can rely on that sign.’ In the language of the
Directive the function of a trademark is to ‘guarantee the trademark
as an indication of origin’.
271 See ECJ, 20 November 2001, Zino Davidoff and Levi Strauss, C-414/99 to C-416/99, ECR 2001, I-8691; and also the
Dutch judgment: Canon v Crown Rb Utrecht, 11 July 2007. This is reflected in section 75 of the Irish Industrial Designs
Act 2001, which provides that “the design right shall not be infringed by the doing of anything in relation to products
to which the design has been applied or is incorporated where such products have been put on the market in a Member
State of the EEA by or with the consent of the registered proprietor.”
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The policy behind this rule has been called ‘fortress Europe.’
It has very substantial implications since nearly all goods (save
perhaps some raw materials) bear trademarks. It means traders
can use trademarks to partition Europe from the rest of the
World Market. This can sometimes have beneficial effects (e.g.
trademarks are perhaps the easiest of intellectual property rights
to invoke to stop re-importation into Europe of pharmaceuticals
sold cheaply in third world countries for local use). But generally
the rule is self-evidently rather anti-competitive and protectionist.
Our task is not to consider whether the rule is good or bad from
an economic perspective. It is to apply it.
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EXHAUSTION OF IP RIGHTS
D. EXHAUSTION OF COPYRIGHT
The first sale doctrine limits the copyright owner’s exclusive rights to
authorize or distribute copies of a copyrighted work to the public. It
provides that a sale of a lawfully made copy terminates the copyright
holder’s authority to interfere with or control subsequent sales or
distributions of that particular copy. In short, through the first sale
doctrine, the first purchaser and any subsequent purchaser of that
specific copy of a copyrighted work receive the right to sell, display
or dispose of their copy. If copyright owner A sells a copy of a work
to B, B may sell that particular copy without violating the law. B does
not, however, receive the right to reproduce and distribute additional
copies made from that work. Thus, if B makes any unauthorized
“
copies of that work, he or she violates the law.
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273 For the position in the EU: ECJ, 18 March 1980, Coditel / Ciné Vog Films, 62/79, ECR 1980, 881 and ECJ, 6 October 1982,
Coditel / Ciné-Vog Films, 262/81, ECR 1982, 3381; KK Sony Computer Entertainment & anr v Pacific Game Technology
(Holding) Ltd [2006] EWHC 2509 (Pat); Independiente Ltd v Music Trading On-Line (HK) Ltd (t/a CD-WOW) [2007] EWHC
533 (Ch)
274 Australia: Interstate Parcel Express Co Pty Ltd v Time-Life International (Nederlands) BV [1977] HCA 52.
391
EXHAUSTION OF IP RIGHTS
that “copyright shall be infringed by any person who, without the licence of
the owner of the copyright and at a time when copyright subsists in a work
imports an article into the Republic [of South Africa] for a purpose other than
for his private and domestic use.”
■■ that respondent imported into South Africa the tapes in issue for
a purpose other than for his private or domestic use;
■■ that to respondent’s knowledge the making of the tapes in issue
would have constituted such an infringement if the article had
been made in South Africa; and
■■ that respondent had no licence from the owner of the copyright
to do what he did.
It follows, as a logical corollary, that, if the person who made the article
[i.e., TDK] could not lawfully (i.e., without infringing copyright) have
made it in South Africa, a person who, with the requisite knowledge
and without licence, either imports the article into South Africa or
sells or distributes it here commits an infringement of copyright in
terms of s 23(2).
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The facts: This case has special facts and the different judgments make the
judgment difficult to analyze. Accordingly, the headnote will be quoted. KCI
is the exclusive Canadian distributor of Côte d’Or and Toblerone chocolate
bars in Canada for its parent companies KFB and KFS. Notwithstanding the
exclusivity agreements, Euro continued to import and distribute Côte d’Or
and Toblerone bars which it had acquired [lawfully] in Europe. In order to
allow KCI to mount the present case, KFB registered three Côte d’Or logos
in Canada as copyrighted artistic works and granted KCI an exclusive licence
in the works as used in association with confectionary products. KFS did
the same with two Toblerone logos. KCI then called upon Euro to cease
and desist distribution of any product to which the copyrighted works were
affixed. When Euro refused, KCI brought an action against Euro alleging that
it had engaged in secondary infringement under s. 27(2) of the Copyright
Act by importing copies of KFS and KFB’s copyrighted works into Canada
for sale or distribution. KCI does not rely on its rights as a trademark holder.
For KCI to succeed, it must show that Euro imported works that
would have infringed copyright if they had been made in Canada
by the persons who made them. However, this hypothetical primary
infringement cannot be established in this case. KFB and KFS made
the impugned copies of the works in Europe. They would not have
infringed copyright if they had produced the Côte d’Or and Toblerone
logos in Canada because they are, respectively, the owners of the
Canadian copyright in those logos. Because a copyright owner
cannot be liable to its exclusive licensee for infringement, there is no
hypothetical infringement, and thus no violation of s. 27(2)(e) of the
Copyright Act in this case by Euro.
393
394
PROVISIONAL
REMEDIES
CHAPTER XVIII
395
PROVISIONAL REMEDIES
A. INTERNATIONAL STANDARDS
This means that laws must provide for temporary injunctions (interim
interdicts in the nomenclature of civil or mixed systems) on notice or, in cases
of urgency, on an ex parte basis: and for search orders to preserve evidence
(the so-called Anton Piller orders). Most jurisdictions comply in general,
without special legislation, with these requirements.
275 The European Commission announced, in a communication of May 24, 2011, that this Directive would be reviewed in
2012 (see: http://ec.europa.eu/internal_market/copyright/docs/ipr_strategy/COM_2011_287_en.pdf).
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397
PROVISIONAL REMEDIES
B. TEMPORARY INJUNCTIONS
3. Advantages of the remedy: One of the most important civil remedies for
the breach of IP rights is a temporary injunction pending the full ventilation
of the dispute at a trial. Apart from restoring the status quo and halting
the allegedly infringing act, interim injunction proceedings usually provide
parties with a preview of the opponent’s case. As a result, cases are often
settled or concluded without a trial. Interim interdicts are cost effective
because they are decided urgently without a full hearing or oral evidence.
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But this does not alter the fact that the court’s purpose, when it
grants the order, is to preserve the rights of the parties pending a final
determination of the issues between them by the court. Furthermore,
as Lord Oliver said in Attorney General v Times Newspapers Ltd
[1992] 1 AC 191, “purpose” in this context refers not to the litigant’s
purpose in obtaining the order or in fighting the action, but to the
court’s purpose. That is the purpose which the court was intending
to fulfill in seeking to administer justice between the parties in the
particular litigation of which it has become seized.
399
PROVISIONAL REMEDIES
400
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Countries that are inclined to follow English precedents tend to apply the
American Cyanamid 276 test for determining the entitlement to an interim
injunction.
276 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL). It has been adopted in Canada: RJR-MacDonald Inc v Canada
(AG) [1994] 1 SCR 311 at 348; Australia: e.g. Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland
(1983) 57 ALJR 425. In India, however, it does not apply to IP cases, and a patentee cannot, for instance rely on the
presumption that the patent is valid and has to prove it, prima facie: Gujarat Bottle v Coca Cola Co 1995 (5) SCC 545;
Huemer v New Yesh Engineers 1996 PTC 232. Standipack v Oswal Trading 1999 PTC (19) 479; “in an infringement act
relating to a patent the plaintiff has to make out a prima facie case about the existence of the patent and its infringement
by the defendant independently of grant of patent as such.”
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PROVISIONAL REMEDIES
10. US law: The law in the USA requires even more than a prima facie right.
As the moving party, Polymer [the applicant] had to establish its right
to a preliminary injunction in light of four factors:
11. The civil-law: The civil-law approach is also different. The requisites
for the right to claim an interim interdict are: (a) a prima facie right; (b) a
well-grounded apprehension of irreparable harm if the interim relief is not
granted and the ultimate relief is eventually granted; (c) that the balance
of convenience favors the granting of an interim interdict; and (d) that the
applicant has no other satisfactory remedy. In view of the discretionary
nature of an interim interdict these requisites are not judged in isolation and
they interact.
This requirement is spelt out in the quoted European Directive in these words:
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12. The plaintiff’s allegations must establish a ground for the grant of
final relief:277
403
PROVISIONAL REMEDIES
404
CHAPTER 18
motions judge should proceed to consider the second and third tests,
even if of the opinion that the plaintiff is unlikely to succeed at trial.
A prolonged examination of the merits is generally neither necessary
nor desirable.
15. Purely legal issues: The American Cyanamid approach applies where
the issues are factual and not merely legal.
WEIR v HERMON
[2001] NICh 8 [Northern Ireland]
16. An order that is final in effect: The American Cyanamid approach does
also not apply where the interlocutory order will be final in effect.278
278 See also New Zealand and Commonwealth Games v Telecom New Zealand [1996] FSR 757 [New Zealand].
405
PROVISIONAL REMEDIES
17. The relative strength of the cases: American Cyanamid does not
prevent a consideration of the relative strengths of the cases of the parties.
In my view Lord Diplock did not intend by the last quoted passage to
exclude consideration of the strength of the cases in most applications
for interlocutory relief. It appears to me that what is intended is that
the court should not attempt to resolve difficult issues of fact or law on
an application for interlocutory relief. If, on the other hand, the court
is able to come to a view as to the strength of the parties’ cases on
the credible evidence then it can do so. In fact, as any lawyer who has
experience of interlocutory proceedings will know, it is frequently the
case that it is easy to determine who is most likely to win the trial on
the basis of the affidavit evidence and any exhibited contemporaneous
documents. If it is apparent from that material that one party’s case
is much stronger than the other’s then that is a matter the court
should not ignore. To suggest otherwise would be to exclude from
consideration an important factor and such exclusion would fly in the
face of the flexibility advocated earlier in American Cyanamid.
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Where the facts are not substantially in dispute, the plaintiffs must be
able to establish a strong prima facie case and must show that they
will suffer irreparable harm if the injunction is not granted. If there
are facts in dispute, a lesser standard must be met. In that case, the
plaintiffs must show that their case is not a frivolous one and there
is a substantial question to be tried, and that, on the balance of
convenience, an injunction should be granted.
F. IRREPARABLE HARM279
The second test consists in deciding whether the litigant who seeks
the interlocutory injunction would, unless the injunction is granted,
suffer irreparable harm, that is harm not susceptible or difficult to be
compensated in damages. Some judges consider at the same time
the situation of the other party to the litigation and ask themselves
whether the granting of the interlocutory injunction would cause
irreparable harm to this other party if the main action fails. Other
judges take the view that this last aspect rather forms part of the
balance of convenience.
19. Irreparable harm relates to the nature rather than to the magnitude
of harm:
Irreparable refers to the nature of the harm suffered rather than its
magnitude. It is harm which either cannot be quantified in monetary
terms or which cannot be cured, usually because one party cannot
collect damages from the other. Examples of the former include
instances where one party will be put out of business by the court’s
decision; where one party will suffer permanent market loss or
irrevocable damage to its business reputation; or where a permanent
279 See also Symonds Cider & English Wine Co Ltd.v Showerings (Ireland) Ltd [1997] IEHC 1 [Ireland].
407
PROVISIONAL REMEDIES
I am not convinced that the plaintiff will suffer irreparable harm since
the losses that Pfizer will incur by sharing the market with Lilly are
reasonably calculable, and the other harm claimed by Pfizer is entirely
of a speculative nature.
G. BALANCE OF CONVENIENCE
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The third test, called the balance of convenience and which ought
perhaps to be called more appropriately the balance of inconvenience,
is a determination of which of the two parties will suffer the greater
harm from the granting or refusal of an interlocutory injunction,
pending a decision on the merits.
“it would be unwise to attempt even to list all the various matters
which may need to be taken into consideration in deciding
where the balance lies, let alone to suggest the relative weight
to be attached to them. These will vary from case to case.”
409
PROVISIONAL REMEDIES
Co. Ltd. was not renewed by the authority but had been struck off
the register of trade marks since the year 2000.
On the other hand, there is the very strong case of the applicant as
to the ownership of the copyright of the Artistic Work. Moreover,
consideration must also be given to the obligation of the State
to comply with its international obligations coupled with the fact
that there is an element of public order, for the legislator has
made it an offence for anybody who infringes the copyright in a
work. Consequently, in the public interest, the rule of law must be
upheld against any private interest, more especially in the field of
infringement of copyright which is legion and rampant. I also take
judicial notice of the fact that the State is attempting to put order
to show another image of the country other than that of being
notoriously known as a haven for counterfeiters.
H. SEIZURE ORDERS
24. History and scope of Anton Piller orders: Seizure orders are required by
both TRIPS and the European Directive. The latter provides as follows (Article 7):
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CHAPTER 18
25. A full analysis of the remedy: The European Court of Human Rights
had the opportunity to deal with these types of orders and in order to
assess their legitimacy it gave a useful exposition of their development under
English law and their scope.
(a) [History]
The High Court [in the UK] developed – in particular from 1974
onwards – the practice of granting in appropriate cases to the plaintiff
or intending plaintiff in civil proceedings ‘Anton Piller orders’, so
called after the name of a case in which their use was approved by
the Court of Appeal (Anton Piller KG v. Manufacturing Processes
Ltd [1976] 1 All ER 779). They are of a procedural and essentially
411
PROVISIONAL REMEDIES
provisional nature only, being granted pending the trial of the action
on the merits.
Whilst Anton Piller orders have been made in a wide variety of cases,
the great majority are granted in proceedings involving allegations of
infringement of patents, trade marks or copyright or of passing off.
Of these, by far the most frequent have been cases involving pirate
records, tapes and video cassettes, where the risks of suppression of
evidence are especially strong.
(b) [Purpose]
As regards this last injunction, the court will confine the items specified
to documents and materials directly relating to the action. It will also
restrict the time of entry and the number of persons who are to be
permitted to enter (very rarely more than four or five). The latter will
include the plaintiff’s solicitor, who is an officer of the court.
412
CHAPTER 18
Before making an Anton Piller order, the court must be satisfied that:
■■ the plaintiff has made out an extremely strong prima facie case
that his claim will succeed on the merits;
■■ the actual or potential damage is very serious for him; and
■■ there is clear evidence that the defendant has in his possession
incriminating documents or things, and that there is a real
possibility that, if he is forewarned, he may destroy such material.
(e) [Undertakings]
413
PROVISIONAL REMEDIES
(f) [Execution]
414
CHAPTER 18
415
PROVISIONAL REMEDIES
I have used the words “vital evidence” in the sense of being evidence
of great importance to the applicant’s case.
280 Mareva Compania Naviera S.A. v International Bulkcarriers S.A., [1975] 2 Lloyds LR 509 (CA).
416
CHAPTER 18
the defendant would not deal with its assets so as to deprive the plaintiff
of the fruits of any future judgment; and it ought to be distinguished from
injunctions where the claimant has a proprietary or other interest in the
particular asset, and also from an Anton Piller order.
281 This judgment does not deal with IP issues, but the same principles apply.
417
PROVISIONAL REMEDIES
of the action; (2) the pursuer must also establish the need for
an interim remedy; (3) a pursuer must lodge security in respect
of the defender’s loss where the pursuer’s claim fails; (4)
damages automatically ensue either if the pursuer loses on the
merits or where the provisional remedy is unnecessary; and, (5)
applications for a remedy are made to a judge. Another feature
common to most European systems is that: (6) application may
be made ex parte, usually on cause shown for this step, but the
resulting remedy is temporary only, and calls for the pursuer to
validate it at a subsequent contested hearing.”
282 See Rasu Maritima S.A. [1978] QB 644; Third Chandris Shipping Corporation v Unimarine S.A., [1979] QB 645.
418
CHAPTER 18
29. The object of the order: The object of the order is not to provide
security but to prevent dissipation of assets.
419
PROVISIONAL REMEDIES
420
CHAPTER 18
31. Basis of jurisdiction: The jurisdiction is the same as that for the grant of
temporary injunctions but it has been extended.283
Members may provide that the judicial authorities shall have the
authority, unless this would be out of proportion to the seriousness
of the infringement, to order the infringer to inform the right holder
of the identity of third persons involved in the production and
distribution of the infringing goods or services and of their channels
of distribution.
283 Walsh v Deloitte & Touche Inc (Bahamas) [2001] UKPC 58 [Bahamas].
421
422
INJUNCTIONS
(INTERDICTS)
CHAPTER XIX
423
INJUNCTIONS (INTERDICTS)
A. INTERNATIONAL STANDARDS
In view of the foregoing, the answer to the tenth question is that the third
sentence of Article 11 of Directive 2004/48 must be interpreted as requiring
the Member States to ensure that the national courts with jurisdiction in
relation to the protection of intellectual property rights are able to order
the operator of an online marketplace to take measures which contribute,
not only to bringing to an end infringements of those rights by users of
that marketplace, but also to preventing further infringements of that kind.
284 For the sake of convenience the English law term of injunction will be used in this text while recognizing that the civil
systems prefer the term interdict. There is not any substantive difference between the two.
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CHAPTER 19
4. The nature of the wrongful act: The power of the court to grant an
injunction is limited by the nature of the act which it is sought to restrain.
In a patent action the plaintiff normally alleges that the defendant has
committed one or two specific types of infringement. They have to be
identified in the plaintiff’s pleadings. In virtually all cases, the infringement
will occupy just a small part of the monopoly secured by the patent and
its claims. Further, in almost all cases, it is only the activities identified in
the particulars of infringement which the defendant threatens to continue.
He has not threatened to commit any other acts. The effect of a broad
injunction would be to restrain the defendant from doing things he has not
threatened to do, may never have thought of doing and may be incapable
of doing.
425
INJUNCTIONS (INTERDICTS)
The court has not considered, let alone determined, whether and
what other activities infringe. This point can arise in any intellectual
property right litigation but it is particularly significant in patent
litigation. It sometimes happens either shortly before or during the
course of a trial that the patentee finds another, different, activity of the
defendant which he wants to add to the particulars of infringement.
Because the issue of infringement may raise new questions of fact
and involve expert evidence, it is common for the courts to decline
leave to amend the pleadings if that course is likely to prejudice the
trial date. The plaintiff will have to start separate proceedings if,
notwithstanding his success in the first action, the defendant insists
on maintaining his right to continue with the second activity. There
is nothing abusive in the defendant deciding to take that position.
Even assuming it is not open to him to challenge again the validity of
the patent (an issue which does not arise here for consideration), it is
legitimate for him to argue non-infringement. In relation to that, no
question of issue estoppel or res judicata arises.
Thomas J
426
CHAPTER 19
Roberts CJ:
From at least the early 19th century, courts have granted injunctive
relief upon a finding of infringement in the vast majority of patent
cases. This “long tradition of equity practice” is not surprising, given
the difficulty of protecting a right to exclude through monetary
remedies that allow an infringer to use an invention against the
patentee’s wishes—a difficulty that often implicates the first two
factors of the traditional four-factor test. This historical practice,
as the Court holds, does not entitle a patentee to a permanent
injunction or justify a general rule that such injunctions should issue.
Kennedy J:
The cases now arising trial courts should bear in mind that in many
instances the nature of the patent being enforced and the economic
function of the patent holder present considerations quite unlike
earlier cases. An industry has developed in which firms use patents
not as a basis for producing and selling goods but, instead, primarily
for obtaining licensing fees. For these firms, an injunction, and
the potentially serious sanctions arising from its violation, can be
employed as a bargaining tool to charge exorbitant fees to companies
that seek to buy licenses to practice the patent. When the patented
invention is but a small component of the product the companies
seek to produce and the threat of an injunction is employed simply
for undue leverage in negotiations, legal damages may well be
sufficient to compensate for the infringement and an injunction may
not serve the public interest.
The court has under s 37 of the Supreme Court Act 1981 a general
power to grant an injunction ‘in all cases in which it appears to the
court to be just and convenient to do so.’ Section 61 of the Patents Act
1977 provides for ‘a claim for an injunction restraining the defendant
… from any apprehended acts of infringement.’ In so doing the section
accords with the general law prior to the passing of that Act.
427
INJUNCTIONS (INTERDICTS)
An injunction is a remedy against further injury and the court will not
make the order if satisfied that no such injury is likely to occur. It is
not because a defendant has done a wrong that an injunction will be
granted against him. Where a patentee has conclusively established
the validity of his patent and that it had been infringed, as a general
rule an injunction will be granted.
The ordinary rules relating to interdicts apply [to patent cases]. Terrell
correctly points out that the basis of an interdict is the threat, actual
or implied, on the part of a defendant that he is about to do an
act which is a violation of the plaintiff’s right and that the actual
infringement is merely evidence upon which the court implies an
intention to continue in the same course. I would have thought
it axiomatic that an interdict is not a remedy for past invasions of
rights. It is for the protection of an existing right.
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The true position is this. The basis for the grant of an injunction in an
intellectual property case is in every respect the same as in any other
case. The plaintiff must show that there is a risk that the defendant will
engage in infringing conduct in the future. If the plaintiff is unable to
make good that proposition, he will not obtain an injunction.
429
INJUNCTIONS (INTERDICTS)
D. FORM OF INJUNCTION
A defendant who has been enjoined must know what he can and
cannot do. He should not be set a puzzle. As noted above, in most
cases the precise outer limits of a patent claim are far from clear. This
is confirmed, if any confirmation is necessary, by the numerous cases
in which the finding on infringement arrived at by the High Court
is reversed in the appellate courts. An injunction not to infringe a
patent incorporates all this imprecision.
430
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Second it exceeds the statutory right given by section 60(1) and (2) in
that it fails to exclude acts which are, under the Act, excepted from
the right. Third it raises considerable difficulties on construction.
431
INJUNCTIONS (INTERDICTS)
the statutory right given, a right which has been held to have been
validly granted and infringed. The injunction granted by the judge
would allow the defendant to do other acts even though they may
infringe. The defendant in those circumstances would be better off
in that a change from that which is described and shown in the
process description would allow him to continue in business without
having to seek guidance from the court before adopting the change.
The advantage to the defendant of only having the injunction cover a
particular article or process is clear. If he makes a change he will not
be in breach and it will be up to the patentee to bring another action.
However the disadvantage to the patentee is equally clear. To obtain
an injunction he has to establish his monopoly and that it has been
infringed, and the judge must conclude that further infringement is
apprehended. From his point of view, it is the infringer who should
seek guidance from the court if he wishes to sail close to the wind.
In the normal course of events that would be reasonable.
432
DAMAGES
CHAPTER XX
H. CONVERSION (27-28)
433
DAMAGES
A. INTERNATIONAL STANDARDS
■■ Courts must be able to order the infringer to pay the right holder
damages adequate to compensate for the injury the right holder
has suffered because of an infringement of that person’s IPR
by an infringer who knowingly, or with reasonable grounds to
know, engaged in infringing activity.
■■ Courts must also have the authority to order the infringer to
pay the right holder expenses, which may include appropriate
attorney’s fees.
■■ In appropriate cases, Members may authorize courts to order
recovery of profits and/or payment of pre-established damages
even where the infringer did not knowingly, or with reasonable
grounds to know, engage in infringing activity.
This recognizes the fact that the measure for damages in the case of the
infringement of IP rights is often to be found in the relevant IP statute and
that the law of a country may make the payment of damages dependent on
knowledge of infringement or on negligence. Because the TRIPS obligations
are minimum obligations a law may provide that an innocent infringer may
be liable for damages.
■■ they shall take into account all appropriate aspects, such as the
negative economic consequences, including lost profits, which
287 The European Commission announced, in a communication of May 24, 2011, that this Directive No. 2004/48 would be
reviewed in 2012 (see: http://ec.europa.eu/internal_market/copyright/docs/ipr_strategy/COM_2011_287_en.pdf).
434
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the injured party has suffered, any unfair profits made by the
infringer and, in appropriate cases, elements other than economic
factors, such as the moral prejudice caused to the rightholder by
the infringement or
■■ as an alternative [...], they may, in appropriate cases, set the
damages as a lump sum on the basis of elements such as at least
the amount of royalties or fees which would have been due if
the infringer had requested authorisation to use the intellectual
property right in question.”
3. The general rule: Unless the statute provides otherwise, the ordinary rules
of law that determine the quantification of damages for statutory wrongs apply.
The rule also applies in civil and mixed legal systems. For instance, according
to Article 1382 of the French Civil Code any harmful wrongdoing must be
compensated and according to Article 1149 compensation usually extends
to the “lost profit” (gain manqué, lucrum cessans); and the loss suffered
(perte subie, damnum emergens).
Since the wrong is a species of delict, the measure will be delictual; it will
be aimed at compensating the proprietor for his patrimonial loss, actual or
prospective, sustained through the infringement.
B. DAMAGES: GENERAL288
288 Reported damages cases are usually patent cases, but the principles are basically the same.
435
DAMAGES
is not limited to ordinary civil courts – specialist IP courts are probably less
qualified to determine questions relating to damages. And in the USA there
is a right to a jury trial to quantify damages.289
In spite of the burden of proof, courts have a duty to assess damages even
if it means that they have to make an estimate. The claimant has a duty to
adduce the best available evidence of quantum and if that has been done,
the court must apply the best estimate rule.290 Claimants often grossly over-
estimate the size of their loss with disastrous litigation costs consequences.291
289 Feltner v Columbia Pictures Television Inc (1998) 118 SCt 1279.
290 England: Chaplin v Hicks [1911] 2 KB 786; Canada: Penvidic Contracting Co. Ltd. v. International Nickel Co. of Canada
Ltd (1975) 53 DLR (3d) 748. South Africa: De Klerk v Absa Bank Ltd [2003] 1 All SA 651 (SCA).
291 General Tire v Firestone [1976] RPC 197 [UK]; Omega Africa Plastics (Pty) Ltd v Swisstool Manufacturing Co (Pty) Ltd 1978
(3) SA 465 (A) [South Africa]; Celanese International Corp v BP Chemicals Ltd [1999] RPC 203 [UK].
436
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by the plaintiff’s loss, not the defendant’s gain. But the common
law, pragmatic as ever, has long recognized that there are many
commonplace situations where a strict application of this principle
would not do justice between the parties. Then compensation for
the wrong done to the plaintiff is measured by a different yardstick.
With respect to the third component, i.e. damages, the trial judge
accepted the respondents’ argument that, once [infringement has
been established], damages [whether nominal or substantial] are
presumed [in a passing off case].
I find the trial judge erred in law in assuming that there would be
damages. Actual or potential damage is a necessary element in finding
liability. In the absence of evidence in this regard, the Court cannot
conclude that there is liability. A plaintiff must “demonstrate that
he suffers or, in a quia timet action, that he is likely to suffer damage
by reason of the erroneous belief engendered by the defendant’s
misrepresentation that the source of the defendant’s goods or services
is the same as the source of those offered by the plaintiff”.
437
DAMAGES
438
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439
DAMAGES
C. LOSS OF PROFITS
One who infringes the patent of another commits a tort, the foundation
of which is made clear by the terms of the grant. This, after conferring
the monopoly of profit and advantage upon the patentee, concludes
by declaring infringers ‘answerable to the patentee according to the
law for damages thereby occasioned.’
292 John W Schlicher Patent law: Legal and economic principles § 9.04.
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There are two essential principles in valuing that claim: first, that
the plaintiffs have the burden of proving their loss: second, that,
the defendants being wrongdoers, damages should be liberally
assessed but that the object is to compensate the plaintiffs and not
punish the defendants.
AMERICAN 21ST CENTURY FOX FILM INC. v BEIJING XIANKE LASER DISCS STORE
(“XIANKE”)
No.62-77 Intellectual Property Case in 1996 for the initial trial by No.1
Beijing Intermediate People’s Court293
293 http://www.chinaiprlaw.com/english/judgemts/judgmt4.htm.
441
DAMAGES
Sometimes the rights holder does not market the goods but holds the rights
as negative rights; sometimes the right relates to something that is not sold,
such as a manufacturing method. In these cases the matter becomes even
more complicated.
294 Omega Africa Plastics (Pty) Ltd v Swisstool Manufacturing Co (Pty) Ltd 1978 (3) SA 465 (A) 472. For the position in
England: Gerber v Lectra [1995] RPC 383.
442
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comparable films, the film has done poorly and where the presence
of pirate copies upon the market has been established, the copyright
owner is, in my judgment, entitled as against the pirate and in the
absence of any other explanation for the lack of success of the film in
question to attribute the shortfall in sales to the activities of the pirate.
12. Causation – the “but for” principle: The burden of proving causation
is on the plaintiff. The plaintiff’s actual situation must be compared with
a hypothetic situation, where infringement had not taken place. The
difference is the damage but only insofar as the difference has actually been
caused by the infringement.
443
DAMAGES
295 Cf Universal City Studios Inc v Mulligan (2) [1999] IEHC 165 [Ireland].
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E. NOTIONAL ROYALTY
15. Basis of the relief: Another device is to permit the plaintiff to claim a
notional royalty from the defendant. In some jurisdictions it is a common-
law measure of compensation while in others there is a statutory basis for
it. The US Patent Act, for instance, provides that a claimant is entitled to
damages that are not less than a reasonable royalty296 and the EU Directive
has it as an option. (South African law: until legislative intervention, it was
not regarded as available.)
445
DAMAGES
These are very useful guidelines, but the principle of them must not
be misapplied. Before a ‘going rate’ of royalty can be taken as the
basis on which an infringer should be held liable, it must be shown
that the circumstances in which the going rate was paid are the same
as or at least comparable with those in which the patentee and the
infringer are assumed to strike their bargain.
446
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plaintiff to adduce evidence which will guide the court. This evidence
may consist of the practice, as regards royalty, in the relevant trade
or in analogous trades; perhaps of expert opinion expressed in
publications or in the witness box; possibly of the profitability of the
invention; and of any other factor on which the judge can decide the
measure of loss.
17. The fact that comparable licenses are not known does not mean that
the court should determine a reasonable rate:
Given that that is the rule in the case of infringements of patents I can
see no reason not to apply it in cases of infringements of copyright.
In each case the infringement is an interference with the property
rights of the owner. Though the nature of the monopoly conferred
by a patent is not the same as that conferred by copyright I see no
reason why that should affect the recoverability of damages in cases
where the monopoly right has been infringed. The fact that the
plaintiff may not be able to prove the application of one measure
of damages, namely lost sales, does not mean that he has suffered
no damage at all, Rather some other measure by which to assess
the compensation for that interference must be sought. Whilst,
no doubt, there are differences between the rights granted to a
patentee and those enjoyed by the owner of the copyright they draw
no distinction between the effect of an infringement of a patent
rather than a copyright.
447
DAMAGES
18. US approach: The difference between the English and the USA in
relation to notional royalties is the fact that in the US the entitlement is
based on statute, as also in South Africa. The reasonable royalty rate
assumes a willing licensor-licensee determination. The infringer must be
allowed a reasonable profit margin in this calculation.
The statutory authority for the district court’s award was 35 USC §
284, which provides in relevant part that the court shall award the
claimant damages adequate to compensate for the infringement,
but in no event less than a reasonable royalty for the use made of
the invention by the infringer.
The parties seem in essential agreement that the trial court correctly
chose to apply the ‘willing buyer-willing seller’ rule in determining
448
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449
DAMAGES
F. ACCOUNT OF PROFITS
20. Difference between accounts and loss: The profit made by the
defendant is seldom equivalent to the plaintiff’s loss. Some jurisdictions
allow a claimant to claim the infringer’s gain by means of an account of
profits. The Canadian Copyright Act is specific in this regard (s 35(1)):
This remedy is not available in countries such as France 300 or South Africa301
because it is in conflict with the ordinary civil-law rule that a harmed party is
only entitled to be compensated to the extent of its loss. However, it is now
available in Germany and Dutch law provides that in addition to claiming
damages, the author or his successor in title may request the court to order
anyone who has infringed the copyright to hand over the profits originating
from the infringement and to render account therefor.
299 In England: Celanese International Corp v BP Chemicals Ltd [1999] RPC 203 218 et seq. In Canada: Imperial Oil v Lubrizol
[1996] 71 CPR (3d) 26.
300 Court of Appeal Paris, 4th chamber, 22 February 1963, Ann. P.I 1963, p. 377, TGI Seine, 3rd chamber February 1964,
JCP Ed. G, 1965, 14334, note Plaisant.
301 Montres Rolex SA v Kleynhans 1985 (1) SA 55 (C).
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21. The claim for account of profit is for compensation and not for actual loss:
A property right has value to the extent only that the court will
enforce it or award damages for its infringement. The question under
discussion is whether the court will award substantial damages for
an infringement when no financial loss flows from the infringement
and, moreover, in a suitable case will assess the damages by reference
to the defendant’s profit obtained from the infringement. The cases
mentioned above show that the courts habitually do that very thing.
SIDDELL v VICKERS
(1892) 9 RPC 152 [UK]
23. The award depends on the defendant’s profits: The inventor is only
entitled to that portion of the infringer’s profit which is causally attributable
to the invention.
302 Um dem Ausgleichsgedanken Rechnung zu tragen, wird bei der Bemessung des Schadensersatzes anhand des
Verletzergewinns gerade fingiert, dass der Rechtsinhaber ohne die Rechtsverletzung durch Verwertung seines
Schutzrechts den gleichen Gewinn erzielt hätte wie der Verletzer.
451
DAMAGES
It is settled law that the inventor is only entitled to that portion of the
infringer’s profit which is causally attributable to the invention. This is
consistent with the general law on awarding non-punitive remedies:
‘[I]t is essential that the losses made good are only those which, on a
common sense view of causation, were caused by the breach’.
And the account of profits retains the characteristics of its origin in the
Court of Chancery. By it a defendant is made to account for, and is
then stripped of, profits he has made which it would be unconscionable
that he retain. These are profits made by him dishonestly, that is by his
knowingly infringing the rights of the proprietor of the trademark. This
explains why the liability to account is still not necessarily coextensive
with acts of infringement. The account is limited to the profits made by
the defendant during the period when he knew of the plaintiff’s rights.
So it was in respect of common law trademarks. So it still is in respect of
registered trademarks. I think that it follows that it lies upon a plaintiff
who seeks an account of profits to establish that profits were made by
the defendant knowing that he was transgressing the plaintiff’s rights.
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25. The meaning of profit: The problem arises as to how profits are to be
ascertained, especially in the case where the product sold is a composite
one. The profits may then be apportioned, depending on what was
appropriated.303
What the defendant must account for is what it made by its wrongful
use of the plaintiffs’ property. The plaintiffs’ property is in the mark,
not in the painting sets. The true rule, I consider, is that a person who
wrongly uses another man’s industrial property – patent, copyright,
trademark – is accountable for any profits which he makes which are
attributable to his use of the property which was not his.
303 See also Dart Industries Inc v Décor Corporation Pty Ltd (1993) 179 CLR 101 [Australia].
453
DAMAGES
subject to the deduction are only those that the infringer had
to additionally incur to sell the infringing products. Any costs
that fall under that category may be subject to the deduction.
Those costs may include not only the purchasing cost and the
cost of goods sold but also the selling cost and the general
administrative cost.
G. STATUTORY DAMAGES
H. CONVERSION
The owner of a copyright whose work has been infringed may recover
compensatory damages and, by way of special remedy, additional
damages. Section 116 confers a right to recover infringing copies
or damages for conversion of those copies. A copyright owner’s
rights and remedies under s 116 are those which may be asserted in
an action for conversion or detention. The hypothesis on which the
remedy is conferred by s 116 is that the copyright owner is not the
owner of the infringing copy, but is treated by a fiction, created by
304 Synthesis of issues concerning difficulties and practices in the field if enforcement IPO/CME/3 par 55.
305 (1998) 46 USPQ 2d 1350 [USA].
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If the goods can be severed then the court can find that it was the
making of the infringing component that constituted an infringement
of the work, and therefore that the infringing copy is only comprised
by that component. In such a case the copyright owner is only entitled
to damages that represent the value of the copyright material taken.
If the goods cannot be severed then the court will find that it was the
making of both components that constituted an infringement of a
work, and therefore the infringing copy consists of both components.
In such a case the copyright owner is entitled to damages that
represent the value of the whole goods.
I. PUNITIVE DAMAGES
455
DAMAGES
307 Quoted with approval in Hero Honda Motors Ltd v Shree Assuramji Scooters 2006 (32) PTC 117 [India].
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This Court has no hesitation in saying that the time has come when the
Courts dealing actions for infringement of trade marks, copyrights,
patents, etc. should not only grant compensatory damages but award
punitive damages also with a view to discourage and dishearten
law breakers who indulge in violations with impunity out of lust for
money so that they realize that in case they are caught, they would
be liable not only to reimburse the aggrieved party but would be
liable to pay punitive damages also, which may spell financial disaster
for them. In Mathias v. Accor Economi Lodging, Inc., 347 F.3d 672
(7th Cir. 2003) the factors underlying the grant of punitive damages
were discussed and it was observed that one function of punitive
damages is to relieve the pressure on an overloaded system of
criminal justice by providing a civil alternative to criminal prosecution
of minor crimes. It was further observed that the award of punitive
damages serves the additional purpose of limiting the defendant’s
ability to profit from its fraud by escaping detection and prosecution.
308 US law, which is not typical in this regard, permits a court to increase the award up to three times the actual damages.
35 USC §284.
309 Ravenscroft v. Herbert (1980) RPC 193; MJA Scientifics International Pty Ltd v SC Johnson & Son Pty Ltd (1998) 43 IPR 275.
457
DAMAGES
310 The full quotation reads: “Turning to sub-para.(iii), one matter which is, in my opinion, relevant, is the difficulty computer
program owners face in trying to protect their copyrights. Computer software is easy to duplicate, distribute and conceal.
Particularly in a case where a person is supplying computer programs as an adjunct to other equipment, and is therefore
not advertising the supply, infringements may be difficult to detect. And, when they are detected, proof of the facts may
be a substantial task.”
458
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311 Quoted in Microsoft Corporation v Able System Development Ltd HCA 17892/1998 [Hong Kong 2002].
459
DAMAGES
460
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461
462
CRIMINAL ENFORCEMENT
OF IP RIGHTS
CHAPTER XXi
A. INTRODUCTION (1-9)
463
CRIMINAL ENFORCEMENT OF IP RIGHTS
A. INTRODUCTION
Concern about the quality of drugs is as old as drugs themselves, says the
World Health Organization. Writings from as early as the 4th century BCE
warn about the dangers of adulterated drugs and, in the 1st century CE,
Dioscorides, a celebrated Greek physician, botanist, pharmacologist and
surgeon, who traveled with the armies of the Roman Emperor Nero,
identified fake herbal drugs in his De Materia Medica, the precursor of
modern pharmacopeias, and advised on their detection.
As we shall see, this definition is wider than the one that applies to IP law.
313 For a general discussion see Duncan Matthews The fight against counterfeiting and piracy in the bilateral trade
agreements of the EU – a briefing paper requested by the European Parliament’s Committee on International Trade
(2008).
314 See also Directive 2011/62/EU of the European Parliament and of the Council of 8 June 2011amending Directive
2001/83/EC on the Community code relating to medicinal products for human use, as regards the prevention of the
entry into the legal supply chain of falsified medicinal products.
315 In January 2012, the WHO Executive Board agreed to propose to the WHO General Assembly the establishment
of a new mechanism - that would de facto supersede IMPACT - for international collaboration on counterfeit and
substandard medical products, though excluding trade and intellectual property issues – see http://apps.who.int/gb/
ebwha/pdf_files/EB130/B130_R13-en.pdf.
464
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R v JOHNSTONE
[2003] UKHL 28 [UK]
Pirated goods comprise illicit copies of the authentic article which are
not sold under the trademark of the authentic article. This would
happen, for instance, when a person makes and sells unauthorized
copies of computer software which is the subject of copyright. Thus,
in the context of music recordings, a counterfeit compact disc is
an unlawful copy of, say, a Virgin compact disc sold ostensibly as a
Virgin product. A pirated compact disc is an unlawful copy of, in my
example, a Virgin compact disc which is sold, not as a Virgin product,
but under a different brand name.
465
CRIMINAL ENFORCEMENT OF IP RIGHTS
Film pirates plunder the best and most recent cinema films. They
transpose them on to magnetic tape: and then sell video cassettes
on the black market. This black market makes huge inroads into the
legitimate business of the film companies. They have been put to
great expense in producing the best films: they have the copyright
which gives them the sole and exclusive right to reproduce them. Yet
here are the pirates plundering it – stealing all the best films.
The defendants have done great wrong to the plaintiffs. They have
plundered the copyright in the plaintiffs’ most recent television films.
They have infringed the copyright in the films and have not paid a
cent for them; they do not have to bear the huge cost of producing
the films. Pirates proliferate the market with infringing copies at a
fraction of the true price. For example, music pirates do not have to
pay anything to the musicians and artistes. They have no production
costs to bear, no studio time to pay for; they reap huge profits without
466
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Pirates are men without scruples. These are not honest men that we
speak of. These are thieves who have stolen from the plaintiffs the
copyright in their best and most recent television films.
6. Old case law: Courts have expressed themselves on the issue since early
times. The first quotation deals with trademarks and the second with the
history of copyright.
PERRY v TRUEFITT
(1842) 49 ER 749 [UK]
I think that the principle on which both the courts of law and of
equity proceed, in granting relief and protection in cases of this sort
[an unregistered trademark case], is very well understood. A man
is not to sell his own goods under the pretence that they are the
goods of another man; he cannot be permitted to practice such a
deception, nor to use the means which contribute to that end. He
cannot therefore be allowed to use names, marks, letters or other
indicia, by which he may induce purchasers to believe, that the goods
which he is selling are the manufacture of another person. I have
no doubt that another person has not the right to use that name or
mark for the purposes of deception, and in order to attract to himself
the course of trade, or that custom, which, without the improper act,
would have flowed to the person who first used, or was alone in the
habit of using the particular name or mark.
467
CRIMINAL ENFORCEMENT OF IP RIGHTS
7. The term “counterfeit goods” is used for the sake of simplicity for both
trademark and copyright infringements – and more: Holders of intellectual
property rights often own and manage a portfolio of rights that includes
both industrial property (patents, designs and trademarks) and copyright and
related rights. Most of the practical problems relating to the enforcement
of industrial property rights and that of copyright and related rights are the
same and for the sake of simplicity the term “counterfeit goods” is often
used in a generic sense to include pirated copyright works.
317 The Economic Impact of Counterfeiting (1998): available at the OECD website.
318 1999 Patent Law s 196: “Any person who has infringed a patent right or an exclusive licence shall be liable to
imprisonment with labour not exceeding five years or to a fine not exceeding 5 000 000 Yen.”
319 Irina D Manta The Puzzle of Criminal Sanctions for Intellectual Property Infringement 24 Harvard Journal of Law &
Technology 269 (2011).
468
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469
CRIMINAL ENFORCEMENT OF IP RIGHTS
Although the classic conventions on IPR, namely that of the Paris Convention
(on industrial property) and of the Berne Convention (on copyright), did not
and do not provide in express terms for criminal sanctions in the event of
counterfeiting or piracy, the type of provision just mentioned can be traced
to those conventions.322
12. TRIPS did not introduce any revolutionary principles: Counterfeiting may
be regarded as a species of fraud – not necessarily on the consumer but on the
state or the rights holder:323
320 For the history of criminal enforcement in the US: Jana Nicole Checa Chong Sentencing luxury: The valuation debate in
sentencing traffickers of counterfeit luxury goods [77] Fordham LR 1147.
321 By virtue of s 11 of the 1911 British Act which provided (inter alia) in s 11 that any person who knowingly (i) makes for
sale or for hire; (ii) trades in; (iii) distributes; (iv) by way of trade exhibits; or (v) imports for sale or hire infringing works,
is guilty of an offence. The Patents, Designs, Trade Marks and Copyright Act 9 of 1916 (South Africa) adopted these
provisions in an annexure. They are still in, for example, the Trade Description Act 1972 (Malaysia) s 8.
322 Michael R Ryan Gray markets, intellectual property rights, and trade agreements in the international marketplace
discusses the enforcement provisions of IP conventions in the context of gray goods: www.cherry.gatech.edu/t2s2006/
papers/ryan-3003-2-T.pdf.
323 R v Priestly [1996] 2 Cr App Rep (S) 144.
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‘Against the merits of enlarging the property rights of one person or class
of persons must always be set the loss of freedom of action that such
enlargement inevitably causes to others.’
324 Donal P. O’Mathuna and Adam McAuley Counterfeit Drugs: Towards and Irish Response to a Global Crisis (2005):
buysafedrugs.info/uploadedfiles/IrishPatientsAssoc_counterfeit.pdf.
Another view is that it is akin to the theft of goodwill: R v Bhad [1999] S Cr App Rep (S) 139.
325 Rank Film Ltd v Video Information Centre [1982] AC 380; Dowling v US 473 US 207 (1985).
326 Steven N Baker & Matthew Lee Fesak Who cares about the counterfeiters? 83 St John’s LR 735.
327 Dimensions of Private Law: Categories and concepts in Anglo-American legal reasoning (2003).
328 Andreas Rahmatian Trade mark infringement as a criminal offence 67 (4) Modern Law Review 670.
329 Canadian Anti-Counterfeiting Network Report on Counterfeiting and Piracy in Canada: A Road Map for Change
(2007):http://www.cacn.ca/PDF/CACN%20Releases/Roadmap_for_Change.pdf.
471
CRIMINAL ENFORCEMENT OF IP RIGHTS
14. Public interest issues :Public interests wider than the mere protection of
private rights are at stake in the case of counterfeiting. These include the
protection of:
■■ fraud,
■■ customs and excise contraventions,
■■ tax evasion,
■■ racketeering and money laundering,
■■ food and drug legislation,
■■ labor related legislation, and
■■ trading offences.
330 Intellectual Property—An Introduction published by the Computer Crime & Intellectual Property Section: justice.gov/
criminal/cybercrime/ipmanual/01ipma.html.
331 Rome, February 18, 2006. who.int/medicines/services/counterfeit/RomeDeclaration.pdf.
472
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The United Nations Interregional Crime and Justice Research Institute study
entitled “Counterfeiting: a global spread, a global threat” highlighted the
scope and dangers of counterfeiting as at 2006.332 It gave these examples:
17. Organized crime, and tax and customs losses: The major import of
counterfeit goods is that of cigarettes, tobacco and alcoholic beverages
according to the European experience. These products usually carry hefty
customs and excise duties and the ability to sell them at their usual prices
without having to account to the tax authorities is a major incentive for
counterfeiting. Such operations can only be conducted by organized crime
syndicates. As Prof. Michael Blakeney pointed out:333
332 http://www.unicri.it/.
333 Policy responses to the involvement of organized crime in intellectual property offences available at wipo.int.
473
CRIMINAL ENFORCEMENT OF IP RIGHTS
474
CHAPTER 21
The trade routes which were developed for the smuggling of drugs
and arms have provided an existing infrastructure for the trade
in counterfeit and pirate products. Indeed, the profitability of
infringing products is now beginning to exceed that of drugs and
arms, on a profit/weight basis, and often with lower penalties should
the perpetrator be identified.”
337 This paragraph represents a quotation from Prosecuting Intellectual Property Crimes, a manual of the US Department
of Justice Executive Office for US attorneys. The work is available on the Internet: www.usdoj.gov/criminal/cybercrime/
ipmanual.
475
CRIMINAL ENFORCEMENT OF IP RIGHTS
trademark holder’s good name even while profiting from it. [See
the Loendersloot judgment quoted below.]
■■ Protecting consumers from fraud. Consumers are entitled to
rely on trademarks when making their purchasing decisions.
Yet counterfeit goods can be of much lower quality, and can
even present serious health or safety risks to consumers, as in
the cases of counterfeit food products, prescription drugs, or
automotive parts.
■■ Protecting safety in society for non-purchasing users. Sales of
counterfeit products often victimize not only the trademark
holder and purchaser, but also non-purchasing users. For
example, airlines may purchase counterfeit airplane parts of which
passengers may be victims; hospitals may purchase counterfeit
heart pumps of which patients may be victims; and parents may
purchase counterfeit infant formula that harms their children.
■■ Enforcing market rules. Just as counterfeiting money and forgery are
crimes that undermine fundamental market rules, counterfeiting of
trademarks weakens modern commercial systems.
With respect to trademark rights, [this] court has held that they
constitute an essential element in the system of undistorted
competition. In such a system, undertakings must be able to attract
and retain customers by the quality of their products or services,
which is made possible only by distinctive signs allowing them to
be identified. For the trademark to be able to fulfill that function, it
must constitute a guarantee that all products which bear it have been
manufactured under the control of a single undertaking to which
responsibility for their quality may be attributed. Consequently, the
specific subject-matter of a trademark is in particular to guarantee
to the owner that he has the exclusive right to use that mark for
the purpose of putting a product on the market for the first time
and thus to protect him against competitors wishing to take unfair
advantage of the status and reputation of the trademark by selling
products illegally bearing it.
476
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more criminal law activity in the developing world whereas the civil route is
preferred in the developed world.
Rights owners argue differently. They accept that the civil route is the
appropriate one, but say that civil enforcement is not necessarily effective
in all countries. Absent proper civil recourse means they have to rely on
criminal measures. This may be due to problems with the judicial system,
questions of costs, or the inability of defendants to pay damages.
Each case must, in our view, be considered on its own facts. There is
no doubt as to the seriousness of software piracy. The matter is not
simply a matter of the private interests of the copyright owners; it is a
matter of public interest to Hong Kong generally. The effectiveness of
enforcement of copyright is now an international issue. It has caused,
338Criminal Enforcement of IPR: The Problem of ‘Over-Criminalization which appeared in the Sixth Anniversary Special Issue
2003 of the Intellectual Property and International Forum, Thailand.
477
CRIMINAL ENFORCEMENT OF IP RIGHTS
339 For critical assessments of these kinds of statistics see Carsten Fink The Economic Effects of Counterfeiting and Piracy: A
Literature Review, in the sixth session of the ACE (2010) (http://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_6/
wipo_ace_6_7.pdf); Loren Yager Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated
Goods, in the sixth session of the ACE (2010) http://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_6/wipo_
ace_6_4.pdf); Charles Clift, A Review of Statistical Information on Counterfeiting and Piracy, in the seventh session of
the ACE (2011) (http://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_7/wipo_ace_7_5.pdf).
340 On the other hand, over 95 per cent of custom interventions in the EU resulted from applications of rights holders,
which have risen sharply in recent years (981 in 2000 to over 18,000 in 2010). Around 2.5 per cent of detained goods
turn out to be legitimate.
341 Policy responses to the involvement of organized crime in intellectual property offenses available at wipo.int.
478
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“In addition, consumers who are deceived into believing that they
bought a genuine article when it was in fact a fake, blame the
manufacturer of the genuine product when it fails, creating a loss of
goodwill. Even cheaper and obvious copies that are bought in good
faith represent a serious threat to the company that wants its brands
associated with quality and exclusivity.”
This statement also requires qualification because it does not apply when
persons knowingly purchase counterfeit goods, as they often do in relation
to luxury goods.
344 What follows has been taken from the report by the OECD prepared by Hema Vithlani mentioned earlier.
480
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481
CRIMINAL ENFORCEMENT OF IP RIGHTS
32. To copy is inherent the human nature: The Greek philosopher Aristotle
(350 BCE) held the view that art is imitation, and that imitation is good
because it is natural to humans from childhood and because children and
we all learn from imitation. He said:346
33. Correlation between culture and the level of copying:347 The literature
identifies three issues in this respect:
345 For a useful study on consumer attitudes see Hardy (BASCAP Coordinator, International Chamber of Commerce (ICC),
Paris) Research Report on Consumer Attitudes and Perceptions on Counterfeiting and Piracy: http://www.wipo.int/
meetings/en/details.jsp?meeting_id=20199. See also, on the whole issue of the prevalence of counterfeiting: Sisule
Musungu The Contribution of, and Costs to, Right Holders in Enforcement, Taking Into Account Recommendation 45
of the WIPO Development Agenda http://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_5/wipo_ace_5_10.
pdf), and Joe Karaganis Media Piracy in Emerging Economies: Price, Market Structure and Consumer Behavior http://
www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_6/wipo_ace_6_5.pdf).
346 Translation by S H Butcher.
347 J .Freitas Santos and J. Cadima Ribeiro An investigation of the relationship between counterfeiting and culture: evidence
from the European Union, EURAM 2006 Conference:econpapers.repec.org/paper/nipnipewp/4_2F2006.htm.References
have been omitted from the quotation. But see Peter K Yu Four common misconceptions about copyright piracy 26
Loyola Los Angeles International and Comparative Law Review 2003: papers.ssrn.com/sol3/papers.
348 Rujirutana Mandhachitara and Tasman Smith Thailand’s Counterfeit Dilemma, ANZMAC 2000 Visionary Marketing for
the 21st Century: Facing the Challenge:smib.vuw.ac.nz:8081/www/ANZMAC2000/CDsite/papers/m/Mandhac1.PDF.
482
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35. Trends: The EC noted the following qualitative changes in the nature
of counterfeit goods imported into the EC:
“The EC surmised that among the reasons for the large increase in
trade in fakes were
349 copyright.gov.in/maincpract9.asp.
350 Michael Blakeney op cit.
483
CRIMINAL ENFORCEMENT OF IP RIGHTS
“New technology has not only benefited manufacturers of genuine products, but also
counterfeiters. New techniques have enabled counterfeiting of what were normally
considered as “high-tech” products, too complicated to fake.”
351 Karen Abraham Zero tolerance for infringement [2007] Managing Intellectual Property (2 ed).
484
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352 Thailand has this rule: “The court shall proceed with the hearing without adjournment until the hearing is over, save in
case of unavoidable necessity.”
485
CRIMINAL ENFORCEMENT OF IP RIGHTS
States Parties shall adopt, to the greatest extent possible within their
domestic legal systems, such measures as may be necessary to enable
confiscation of:
40. Objects:
The principal objects of the Proceeds of Crimes Acts are, accordingly, to:353
486
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to keep faith with the vast majority of people who do not commit
crimes and who do meet their obligations to the community by
paying taxes and acting within the law.
■■ Enforcement priorities;
■■ The deterrent effect of prosecution (an issue discussed later under
Sentencing);
■■ The individual’s culpability in connection with the offense;
■■ The individual’s history with respect to criminal activity;
354 Deciding Whether to Prosecute an Intellectual Property Case, available at: http://www.cybercrime.gov/
usamarch2001_1.htm
487
CRIMINAL ENFORCEMENT OF IP RIGHTS
I. LIABILITY OF ACCESSORIES
355 Zero Tolerance v Venus Adult Shops [2007] FMCA 155. Daniel Seng “Comparative analysis of the national approaches
to the liability of internet intermediaries”: www.wipo.int/.../en/doc/liability_of_internet_intermediaries_06092011.pdf.
488
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489
CRIMINAL ENFORCEMENT OF IP RIGHTS
356 Roadshow Films Pty Limited v iiNetLimited [2011] FCAFC 23. In the Miruku case [Japan]it was found that the owner of
the karaoke bar is liable for copyright infringement for singing of songs by the customers in the karaoke bar, and at
the same time the lessor of the karaoke machine to the owner is liable for contributory infringement of the copyright
by leasing the karaoke machine used for accompanying such singing by customers. See Masayoshi Sumida “On the
Judgment by the Appellate Court on the Miruku Case”: http://www.cric.or.jp/cric_e/cuj/cuj98/cuj98_3.html.
490
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47. The liability of landlords for the infringing acts of tenants: The issue of
landlord liability is a contentious issue. It is a possibility in some jurisdictions
though the legal basis varies. It is easier to attach civil liability than
criminal liability because of the requirement of guilty knowledge and the
lesser burden of proof. In general the principles set out in the preceding
paragraphs apply.357
357 See also Louis Vuitton Malletier SA v Texas International PartnershipCase 4:10-cv-02821 (US District Court, Southern
District of Texas, Houston Division) 18 November 2011.
491
CRIMINAL ENFORCEMENT OF IP RIGHTS
The test was more clearly articulated in a later case as follows: “even
in the absence of an employer-employee relationship one may be
vicariously liable if he has the right and ability to supervise the infringing
activity and also has a direct financial interest in such activities.”
Moreover, we agree with the Third Circuit’s analysis in that providing
the site and facilities for known infringing activity is sufficient to
establish contributory liability.
492
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493
CRIMINAL ENFORCEMENT OF IP RIGHTS
This led to the extradition of G to the USA from Australia in spite of the fact
that G had never set foot in the USA.
50. The search for modern tools: Traditional rules do not always satisfy
the requirements created by the Internet-era. As this judgment shows, the
territoriality principle, which applies to IP rights, limits a court’s jurisdiction
to the territory where the infringement took place.
358 See “Trademarks and Internet” prepared by the WIPO Secretariat in the framework of the 24th session (2010) of the
Standing Committee on the Law of Trademarks, Industrial Designs and Geographic Indications (SCT): http://www.
wipo.int/edocs/mdocs/sct/en/sct_24/sct_24_4.pdf; “Trademarks and Internet” prepared by the WIPO Secretariat in the
framework of the 25th session (2011) of the SCT: http://www.wipo.int/edocs/mdocs/sct/en/sct_25/sct_25_3.pdf; Daniel
Seng, Comparative Analysis of the National Approaches to the Liability of Internet Intermediaries: http://www.wipo.int/
copyright/en/doc/liability_of_internet_intermediaries.pdf; Lilian Edwards, Role and Responsibility of Internet Intermediaries
in the Field of Copyright and Related Rights: http://www.wipo.int/copyright/en/doc/role_and_responsibility_of_the_
internet_intermediaries_final.pdf.
359 Michael Blakeney Policy responses to the involvement of organized crime in intellectual property offences: http://www.
wipo.int/edocs/mdocs/enforcement/en/wipo_ace_5/wipo_ace_5_5.pdf.
494
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360 http://ec.europa.eu/internal_market/iprenforcement/docs/memorandum_04052011_en.pdf.
495
CRIMINAL ENFORCEMENT OF IP RIGHTS
counterfeit goods via the Internet in the European Union.361 The purpose of
the memorandum is this:
361 As to the position in France: see the Charte Brochand Sirinelli (available at: http://www.minefe.gouv.fr/actus/
pdf/091216charteinternet.pdf). See the presentation of this charter made by Pr. Sirinelli during the 7th session of the
WIPO Advisory Committee on Enforcement:: http://www.wipo.int/edocs/mdocs/enforcement/en/wipo_ace_7/wipo_
ace_7_8.pdf.
496
COUNTERFEITING OF
TRADEMARK GOODS
CHAPTER XXII
A. INTRODUCTION (1-3)
F. WILFULNESS (18-21)
497
COUNTERFEITING OF TRADEMARK GOODS
A. INTRODUCTION
R v JOHNSTONE
[2003] UKHL 28 [UK]
Counterfeiting, piracy and bootlegging are not exact terms but all
involve deliberate, and generally fraudulent, infringement of various
intellectual property rights—notably trademarks, copyright, design
right and performing rights.
For some reason or other the definition is not of general application in the
TRIPS Agreement because the definition appears in the context of customs
obligations and in a footnote. Although it is useful, the definition is not
very satisfactory. The ACTA (Anti-Counterfeiting Trade Agreement) also
defines counterfeiting but in a way that emphasizes that trademark rights
are territorial:
INTA (the International Trademark Association) in its model law defines the
term “counterfeit mark” (it uses the synonym “spurious” in line with US
practice) in more detail to mean:
498
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“a spurious mark:
499
COUNTERFEITING OF TRADEMARK GOODS
the registration even if the trade mark holder is not using the mark
on those goods himself. It is, however, limited to goods which, by
virtue of the fact they bear the offending mark, infringe the trade
mark holder’s rights.
B. INTERNATIONAL OBLIGATIONS
5. Goods and services: The TRIPS Agreement requires not only the
protection of goods marks against counterfeiting but in addition the
protection of service marks. However, because of an interpretation issue,
most countries appear to fail to criminalize counterfeit service marks. Others
do not appear to distinguish between the two types of marks for present
purposes and, accordingly, by implication include service marks while a
country such as Singapore does so by way of its definition of a counterfeit
trademark, which includes a registered trademark as applied to services.
500
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(1) A person commits an offence who with a view to gain for himself
or another, or with intent to cause loss to another, and without the
consent of the proprietor–
(b) sells or lets for hire, offers or exposes for sale or hire or distributes
goods which bear, or the packaging of which bears, such a sign, or
(2) A person commits an offence who with a view to gain for himself
or another, or with intent to cause loss to another, and without the
consent of the proprietor–
(3) A person commits an offence who with a view to gain for himself
or another, or with intent to cause loss to another, and without the
consent of the proprietor–
501
COUNTERFEITING OF TRADEMARK GOODS
■■ the sign is identical with the trade mark and is used in relation
to goods or services similar to those for which the trade mark is
registered, or
■■ the sign is similar to the trade mark and is used in relation to
goods or services identical with or similar to those for which the
trade mark is registered,
R v JOHNSTONE
[2003] UKHL 28
502
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C. REGISTERED TRADEMARK
503
COUNTERFEITING OF TRADEMARK GOODS
weak marks – they prefer to use the magnetism of famous and strong marks
because that is where the money lies.
11. Testing counterfeting against the registration certificate: Should (1) the
definition of a “counterfeit” trademark be applied from the standpoint of an
average purchaser or an expert, and should (2) the alleged counterfeit mark
be compared with the registered mark as it appears on actual merchandise
or as it appears on a registration certificate? The judgment below answered
the two questions as follows: (1) the comparison should not be by the expert
eye and (2) the comparison should be between the trademark as used and
not as registered and the counterfeit product. The second answer may be
correct in the context of US law but, with respect, appears to be suspect in
relation to other laws.
362 But see the Indian Trademarks Act 1999 sect 113.
504
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D. NATURE OF INFRINGEMENT
This test is not the same as the standard trade mark infringement
test of ‘likely to deceive or cause confusion’ but counterfeiting,
363 Jason Bosland, KimberleWeatherall and Paul Jensen Trademark and counterfeit litigation in Australia.www.law.unimelb.
edu.au/ipria/publications/workingpapers.html.
505
COUNTERFEITING OF TRADEMARK GOODS
13. Actual confusion is not required:364It is known that many persons buy
counterfeit goods willingly. However, an accused may not rely on the fact
that the purchaser was not or could not have been misled because, for
instance, of the price or low quality of the goods or the location of the
seller’s premises.
R v BOULTER
[2008] EWCA Crim 2375
“The material bearing the trade marks was of such poor quality
that no one could think that its trade origin was that of the
trade mark owner. Accordingly, the use of the trade marks
was not likely to jeopardise the guarantee of origin which
constituted the essential function of the trademark rights
owned by the trade mark owners. It is therefore denied that
what the Defendant undertook constituted a civil infringement
of the trademark or, therefore, a criminal offence.”
The judge ruled that it was immaterial whether the quality of the
counterfeiting was so poor that no-one would think that its trade
origin was that of the trademark owner. In the light of that ruling
the applicant entered his pleas of guilty.
506
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section 10(1) case, for in this instance the trademark, however badly
it may have been copied, was identical with the trademark registered
by the various proprietors, and the goods which were found in the
applicant’s possession in the course of his trade were identical with
the goods for which those trademarks were registered.
The goods in this case did not involve the use of a trademark for a
descriptive purpose but, as already stressed, was pure counterfeiting.
It self-evidently damages the registered proprietor of a trademark if
that proprietor is not able to control the use of its logo as a badge
of origin and if goods of variable quality bearing that stamp are on
the market.
The position is the same in the USA as appears from this report:365
“The statute does not require a showing that direct purchasers would be
confused, mistaken, or deceived. It is sufficient that there is a likelihood
of confusion, mistake, or deception to any member of the buying
public, even a person who sees the product after its purchase. Because
likelihood of confusion, mistake, or deception applies to members of the
general purchasing public and not just to the immediate purchaser, this
factor may be present even where the defendant told the immediate
purchaser the item was not genuine, or where the sale of counterfeit
goods for a fraction of the price of expensive trademarked goods might
alert a prospective purchaser that the item was not genuine.”
507
COUNTERFEITING OF TRADEMARK GOODS
14. Is cloning required? The cloning issue can best be described with
reference to a simplified example. A trademark is registered in class 25
in relation to clothing, shoes and headgear. The rights owner uses the
trademark on shoes only but the alleged counterfeiter uses the identical
mark on headgear or on a completely different type of shoe. One can also
conceive of a situation where the rights holder has not used the trademark at
all. In these cases the infringer (because it will be trademark infringement),
although using the identical trademark, did not clone goods bearing a trade
mark of the rights holder. Some argue that unless trademarked goods have
been cloned they cannot be counterfeit and that cloning of the mark itself
and used on goods covered by the mark is not enough.
The answer depends on the terms of any particular national law. Cloning is
for instance not required in South Africa or the USA.
366 AJ Park & Son for the Ministry of Commerce Consultant’s Report on Theft of Intellectual Property – Piracy and
Counterfeiting, para B7.
508
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■■ identical to, or
■■ indistinguishable in its essential aspects from the registered
trademark.
The UK statute, for one, follows this wording closely when it speaks of a
“sign identical to, or likely to be mistaken for, a registered trademark”. The
Singapore Act is similar but is wider when it speaks of “a sign identical to or
so nearly resembling a registered trademark as to be calculated to deceive”
or the falsification of a genuine registered trademark. (The term “calculated
to deceive” has a fixed meaning in common-law jurisdictions. It means
“likely to deceive”, the wording used by the New Zealand legislation.)
509
COUNTERFEITING OF TRADEMARK GOODS
On the other hand, marks that are identical to the registered mark
as it appears in the marketplace have been held to be counterfeit.
(“Montecristo” cigars were counterfeits of plaintiff’s cigars bearing
that name despite minor differences in the trade dress); (defendants’
T-shirts that exactly reproduced PEPE mark as it appeared on
plaintiff’s T-shirts were counterfeit); (imported bracelets were
counterfeit where the differences from plaintiff’s bracelets could be
detected only with a jeweler’s magnifying loupe).
16. Use as badge of origin. From the fact that counterfeiting is by its very
nature trademark infringement, it follows that the accused must have used
the counterfeit mark as a badge of origin, i.e., to indicate a connection in
the course of trade between the goods (or, if applicable, services) and the
trademark owner. Descriptive use is not infringing use.
R v JOHNSTONE
[2003] UKHL 28
510
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US v PETROSIAN
126 F.3D 1232
511
COUNTERFEITING OF TRADEMARK GOODS
that Coca-Cola was the source of the beverage in the bottles and
falsely identified the beverage in the bottles as Coca-Cola.
E. LACK OF AUTHORIZATION
Implicit in this requirement is that the prosecution must prove that the
goods are not original goods, meaning that they did not originate from
the trademark owner or his licensee. The effect of this is that the better
the counterfeiting the more difficult it is to prove the crime. Detection
is becoming increasingly difficult because it is committed:368
368 Improvements in the International Legal Framework for Criminal Sanctions against the Offense of Trademark
Counterfeiting 20 June, 2007.www.inta.org/index.
512
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In Nigeria and Singapore, the burden of proving the consent of the proprietor
lies on the accused. Although the shift may be useful it ought, generally,
not be difficult for the prosecution to establish this element of the crime.
F. WILFULNESS
R v BORGE
2007 CanLII 36083 (Ontario S.C.)
The appellants also submit that the trial judge misdirected himself
in law as to the meaning of wilful blindness. In articulating their
position, the appellants correctly state the test for wilful blindness as
outlined in R. v. Sansregret, 1985 CanLII 79 (S.C.C.). In these cases,
it has been held that wilful blindness is not just a mere failure to
make inquiries in circumstances where a reasonable person would
do so; it includes subjective components that make it tantamount to
actual knowledge.
369 Proposal of Directive of the European Parliament and of the Council on criminal measures aimed at
ensuring the enforcement of intellectual property rights (see http://www.europarl.europa.eu/sides/getDoc.
do?type=TA&reference=P6-TA-2007-0145&language=EN), eventually withdrawn in 2010 by the European Commission.
513
COUNTERFEITING OF TRADEMARK GOODS
Applying the test formulated above within the context of this case, the
Crownhad to prove beyond a reasonable doubt that:
The appellant had a real suspicion that the CDs were counterfeit;
R. v. Sansregret (supra) also dealt with the issue of wilful blindness, where
he defined its legal concept and applicability:
514
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In many countries it is for the accused to prove the absence of mensrea. In the
UK and countries such as Barbados and Jamaica it is a defense that the accused
believed on reasonable grounds that the use of the sign in the manner in which
it was used, or was to be used, was not an infringement of the registered
trademark. From this it follows that the intention to profit or to cause loss must
be established by the prosecution but that the accused must prove reasonable
grounds for an innocent mindset. However, a lack of intention to infringe is
not a defense. In Barbados any trademark infringement is criminal provided it
is done knowingly while in Singapore the importation of counterfeit goods is
punishable unless the accused can prove his innocent mindset.
R v JOHNSTONE
[2003] UKHL 28
515
COUNTERFEITING OF TRADEMARK GOODS
(4) Those who trade in brand products are aware of the need to be
on guard against counterfeit goods. They are aware of the need to
deal with reputable suppliers and keep records and of the risks they
take if they do not.
(5) The s 92(5) defence relates to facts within the accused person’s
own knowledge: his state of mind, and the reasons why he held the
belief in question. His sources of supply are known to him.
In my view factors (4) and (6) constitute compelling reasons why the
s 92(5) defence should place a persuasive burden on the accused
person. Taking all the factors mentioned above into account, these
reasons justify the loss of protection which will be suffered by
the individual. Given the importance and difficulty of combating
counterfeiting, and given the comparative ease with which an
accused can raise an issue about his honesty, overall it is fair and
reasonable to re q u i re a trader, should need arise, to prove on the
balance of probability that he honestly and reasonably believed the
goods were genuine.
The three appellants were each convicted of possession for sale or for any
purpose of trade or manufacture, of goods to which forged trademarks had
been applied, contrary to section 9(2) of the Trades Description Ordinance.
516
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ascertained, that a forged trade mark had been applied to the goods
or that a trade mark or mark so nearly resembling a trade mark as
to be calculated to deceive had falsely been applied to the goods.”
Such matters as the very low price paid for the goods, the fact that they
were purchased in assorted batches, that other goods in those batches
were regarded as of doubtful provenance, and finally the knowledge of
the appellants that the factories in China from which the goods were
purchased would or could provide no confirmation of the legitimacy
of the goods would, at the least, have required the appellants to have
taken matters further. As the magistrate said, had they done so and
responded with an appropriate degree of diligence (which simply required
them to contact the factories or the agents of the trademark owners) the
appellants would have readily discovered the garments were counterfeit.
Again as the magistrate said, in this modern day and age with the
standard of communication facilities available to businessmen in Hong
Kong, that in the present case was not the imposition of too great a
degree of diligence.
517
COUNTERFEITING OF TRADEMARK GOODS
For the reasonable diligence defence to apply, it was not enough for an
importer or exporter to show on the balance of probabilities that it had no
actual knowledge or reason to suspect that the relevant goods bore a false
trade description or forged trademark. An accused must also demonstrate
that it could not with “reasonable diligence” (not “due diligence” or “all
due diligence”) have discovered any false trade description or forgery. This
was an objective test and required an examination of what the importer
or exporter could have been reasonably expected to have done in the
circumstances, not what an importer or exporter in any given case had
actually done. The test was subjective only in that one must look at the
particular circumstances of the accused.
518
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21. Not all countries require wilfulness: The prohibited acts in the South
African Counterfeit Goods Act, which will serve as an example, have been
set out earlier. The commission of those acts are criminal if:
■■ at the time of the act or conduct, the person knew or had reason
to suspect that the goods to which the act or conduct relates,
were counterfeit goods; or
■■ the person failed to take all reasonable steps in order to avoid any
act or conduct of the nature contemplated from being performed
or engaged in with reference to the counterfeit goods.
G. COMMERCIAL SCALE
Accordingly, most laws are directed at punishing the counterfeiter and the
dealer in counterfeit goods. The purchaser of a fake watch, CD or DVD does
not commit a crime unless the purchase is with the object of an on-sale.
Likewise, a person who for own use makes an otherwise unauthorized copy
does not commit the crime of counterfeiting371.
R v JOHNSTONE
[2003] UKHL 28
Civil liability arises only in respect of use of a sign ‘in the course
of trade’. The equivalent phrase ‘in the course of a business’
appears in s 92 in respect of some, but not all, of the alternative
sets of factual ingredients of the offences. An essential ingredient
of all the criminal offences created by s 92(1) to (3) is that a
person commits an offence where ‘with a view to gain for himself
370 Proposal of Directive of the European Parliament and of the Council on criminal measures aimed at
ensuring the enforcement of intellectual property rights (see http://www.europarl.europa.eu/sides/getDoc.
do?type=TA&reference=P6-TA-2007-0145&language=EN), eventually withdrawn in 2010 by the European Commission.
371 On the notion of commercial scale within the meaning of Article 61 TRIPS, see WTO Panel Report in case DS362
China – Measures affecting the protection and enforcement of intellectual property rights(http://www.wto.org/english/
tratop_e/dispu_e/362r_e.pdf) and in particular par 7.532 et seq.
519
COUNTERFEITING OF TRADEMARK GOODS
There is, however, a move towards a no tolerance policy and in France, for
one, the purchaser or possessor may be guilty of an offence.
520
PIRACY OF
COPYRIGHT GOODS
CHAPTER XXIII
A. INTRODUCTION (1-7)
521
PIRACY OF COPYRIGHT GOODS
A. INTRODUCTION
pirated copyright goods means any goods which are copies made
without the consent of the right holder or person duly authorized by
the right holder in the country of production and which are made
directly or indirectly from an article where the making of that copy
would have constituted an infringement of a copyright or a related
right under the law of the country in which the [enforcement]
procedures are invoked.
Many of these issues were addressed in detail in the previous chapter which
deals with trademark counterfeiting to which reference should be made.
522
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Some works are, because of technology, more prone to piracy and they are
(to use non-technical language) printed works or works published on the
Internet (photocopying or electronic dissemination), sound recordings (CDs),
cinematograph films (DVDs), computer programs, compilations of data and
broadcastings.
The TRIPS requirement for pirating is the making of copies that infringe
copyright. This, prima facie, means that all copyright infringement is not
covered, only that consisting of the making of copies. A reproduction or
adaptation is often defined in wider terms in local laws as for copying and
everything falling there under would not necessarily amount to the making
of a copy for purposes of piracy.
Typically only certain circumscribed acts – and not all infringing acts – are
criminalized. The acts as defined in the UK legislation are representative:372
372 Copyright, Design and Patents Act 1988 (C. 48) s 107. There is a similar provision in relation to illicit recordings.
523
PIRACY OF COPYRIGHT GOODS
524
CHAPTER 23
section 35(2). Each copy was also a copy in electronic form as it was
only usable by electronic means. If it were to be further reproduced,
the resultant electronic copies would also be infringing copies of the
protected work.
525
PIRACY OF COPYRIGHT GOODS
Many countries (including Hong Kong and Singapore) follow the example of
the UK which, generally, requires copying for commercial purposes (which
may not be the same as on a commercial scale) save with two exceptions:
importation otherwise than for private and domestic use376 and distribution
(in the sense discussed above) otherwise than in the course of a business to
such an extent as to affect prejudicially the owner of the copyright, an article
which is, an infringing copy of a copyright work.377
■■ registration (notification),
■■ affidavit evidence, and
■■ presumptions.
374 Prosecuting Intellectual Property Crimes, U.S. Department of Justice Executive Office for United States Attorneys
Manual: www.usdoj.gov/criminal/cybercrime/ipmanual.
375 Title 17 para 506.
376 Cf the Danish judgment in Rolex v Invest ApS of 24 October 2006: domstol.fe1.tangora.com.
377 On the notion of « commercial scale » within the meaning of Article 61 TRIPS, see WTO Panel Report in case DS362
China – Measures affecting the protection and enforcement of intellectual property rights (http://www.wto.org/english/
tratop_e/dispu_e/362r_e.pdf).
526
CHAPTER 23
may provide prima facie evidence of subsistence. The USA, which formerly
required registration for subsistence, permits registration, which serves the
mentioned purpose because a certificate of registration made before or
within five years after first publication of the work constitutes prima facie
evidence of the validity of the copyright.378
South African law also provides in separate legislation380 for the registration
of copyright but only in relation to cinematographic films (as defined in the
Copyright Act). The purpose of registration is to facilitate proof in both
civil and criminal case of the subsistence of copyright.381 The Act provides
for a transparent process for registration because the application has to be
advertised and may be opposed. The registration may also be revoked on
application.382
10. Affidavit evidence: Systems that generally only permit oral evidence
in relation to disputed issues do allow for the use of affidavit evidence to
establish subsistence of copyright.
Australian and Singapore law, for instance, allow affidavit evidence in civil as
well as criminal proceedings. This evidence may establish that:
378 US Department of Justice’s Trafficking In Counterfeit Trademarks, Service Marks, and Certification Marks -18 U.S.C. § 2320”:
www.cybercrime.gov/18usc2320.htm: “Once the certificate of registration is introduced by the government and
accepted as authentic by the court, the burden shifts to the defendant to prove that the copyright is not valid or that
the registration was obtained fraudulently, . . . after which the prosecutor may rebut with evidence showing that
the certificate is genuine, the registration was properly obtained, or otherwise that the copyright is valid. If the work
was registered more than five years after its first publication, the certificate’s probative value is left to the court’s
discretion.”
379 United States v. Cleveland, 281 F. 249,253 (S.D. Ala. 1922) against United States v. Backer, 134 F.2d 533, 535-36 (2d
Cir. 1943).
380 Registration of Copyright in Cinematograph Films Act, 1977.
381 “In all civil and criminal proceedings relating to copyright in cinematograph films, the fact that a person is registered as
the owner or licensee of the copyright in a cinematograph film shall be prima facie evidence of the validity of the original
registration of that copyright and of all subsequent assignments and transmissions thereof.”
382 Hong Kong law allows for a copyright register to be provided by means of regulation but registration does not,
apparently, dispose of the requirement of an affidavit although the affidavit need not be as expansive as otherwise. See
the discussion below.
527
PIRACY OF COPYRIGHT GOODS
The legislation applicable in Hong Kong is probably the most detailed and
specific. It permits an affidavit which purports to have been made by or on
behalf of the owner of a copyright work and which states:
■■ the date and place that the work was made or first published;
■■ the name, domicile, residence or right of abode of the author of
the work;
■■ the name of the owner of the work;
■■ that copyright subsists in the work; and
■■ that a copy of the work exhibited to the affidavit is a true copy
of the work.
11. Presumptions – the Berne requirements: Lastly, there are some relevant
presumptions having their origin in the Berne Convention (Art. 15):
528
CHAPTER 23
529
PIRACY OF COPYRIGHT GOODS
530
CHAPTER 23
Both parties made submissions to the effect that the prima facie case
that each had respectively established had the effect of shifting the
burden of proof to the other. It was the applicants’ submission that
having discharged the evidentiary burden of bringing into operation
ss 126A, 126B and 128, it necessarily remained for the respondents
to adduce sufficient evidence to extirpate the presumptions triggered
respectively by those provisions.
The applicants urged that the words unless the contrary is established
appearing in s 128 have the effect that the presumptions of
subsistence and ownership in favour of the entity, whose name
appeared on copies of the work first published, would stand unless
the contrary was proved on the balance of probabilities. So much
was not disputed by the respondents and correctly so in my view.
531
PIRACY OF COPYRIGHT GOODS
386 R. v. Laurier Office Mart Inc. (1994), 58 C.P.R. (3d) 403, aff’d (1995), 63 C.P.R. (3d) 229 (Ont.). But see Aga Khan v
Tajdin 2011 FC 14. These judgments are all Canadian.
532
SENTENCING
CHAPTER XXIV
533
SENTENCING
It follows from this that the drafters of TRIPS regarded deterrence as the
main purpose of criminal sanctions.
It is also clear from the wording of the article that the level of penalties
has to be comparable to those for crimes of a corresponding gravity. The
TRIPS Agreement does not, however, state what those other crimes are
and it is left to Member countries to identify them. By the very nature of
counterfeiting and piracy it is to be expected that the comparable crimes are
commercial crimes such as fraud and the like.
534
CHAPTER 24
“Care should be taken that the punishment does not exceed the guilt.”
6. Deterrence: One may safely say that the possibility of high sentences
does not, without more, have any material deterrent effect.
535
SENTENCING
able to investigate all crime within a reasonable time and bring the case
to court and unless the court system is effective no sentence can have any
deterrent value. A criminal commits a crime on the supposition that he will
not be caught. The more realistic this supposition the more motivation there
is for ignoring laws and committing crimes. The imposition of a sentence of
imprisonment in Hong Kong and Singapore for peer-to-peer infringement
created some shock waves, at least in the popular press.
This view can be justified with reference to the facts as this extract shows:392
536
CHAPTER 24
9. Public opinion:
“Sentencing practice for trade mark crimes should not neglect the
issue of proportionality. Too severe penalties may not deter, but even
encourage counterfeiting at a larger scale (because taking the risk
of harsh punishment only pays off in relation to larger operations),
and they may undermine public respect and acceptance of trade
mark and criminal law alike: ‘If the death penalty is imposed for
both small and considerable thefts [quoting Voltaire], it is obvious
that [the offenders] will try to steal much. They may even become
murderers if they believe that this is a means not to be detected.
All that proves the profound truth that a severe law sometimes
produces crimes.’ What Voltaire wrote in relation to theft in 1766,
is also valid in relation to intellectual property offences today.”
537
SENTENCING
11. Moral culpability: Sandra L Rierson correctly points out that the
legislative justification for severe sentences is based on the perceived harm
to the public but that the harm depends on the nature of the counterfeiting
and that generalizations are inapposite. She said:396
396 Sandra L. Rierson Pharmaceutical Counterfeiting and the Puzzle of Remedies 8 Wake Forest Intellectual Property LJ 433
(2008): ssrn.com/abstract=1265885.
538
CHAPTER 24
12. Sentencing guidelines. The South African Counterfeit Goods Act, after
prescribing maxima, contains the following list of useful sentencing guidelines:
US District Court Judge Nora Barry Fischer agreed with the defendant
and applied the street value in determining the infringement
amount. Notably, the court found that
397 Valuation of counterfeit goods for purposes of sentencing (especially where there are sentencing guidelines)
77 Fordham L. Rev. 1147 (2008-2009).
539
SENTENCING
I must say this first of all: that Hong Kong carefully guards
intellectual property rights. These rights are not illusory; they are
not something which exists only in theory and not in practice.
They are real, they are valuable and they amount to genuine
property. And the owners of those rights are entitled to the same
level of protection from dishonest appropriation as the owners of
ordinary, more tangible property. What is created by or on behalf
of the owners of copyright is theirs to deal with and dispose of
as they choose. It is not up to others to dictate how they should
do so or at what price. It is not open to others to make moral
judgments about the price of a book or a DVD or a music CD,
and claim that it is excessive, as some form of justification for
infringing the copyright. The law does not accord any validity to
such attempts to justify copyright piracy.
540
CHAPTER 24
541
SENTENCING
542
CHAPTER 24
15. Aggravating factors: In this judgment the Court took into account as
aggravating circumstances the fact that the operation was planned, the
scale and diversity of the operation, and the fact that the accused was the
mastermind behind the operation.
Planned Operation
The accused in the present case had adopted a modus operandi in selling
counterfeit goods. He would rent a shop and employ an accomplice
to run the shop selling the counterfeit goods. The accomplice would
serve as a fall guy who will for all intents and purposes appear to be the
person running the shop. In all, the accused set up three shops and
he had various accomplices to assist him in manning the shops. The
operation is well-planned and the detection of the accused is difficult
as he is supervising in the background. In PP v Tan Fook Sum [1000]
2 SLR 523, the High Court stated;
543
SENTENCING
Mastermind
544
CHAPTER 24
545
546
BORDER MEASURES, TRANSIT
AND TRANSHIPMENT
CHAPTER XXV
547
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
A. BORDER MEASURES
Customs officials have, obviously, other legal remedies at their disposal that
do not depend on the TRIPS Agreement in order to detain certain counterfeit
goods, depending on the nature of counterfeiting. The goods may not
comply with other laws such as health and environmental regulations. They
may have been fraudulently marked. In all such cases customs may act
ex officio and does not depend on the rights holder to act.
548
CHAPTER 25
399 Council Regulation (EC) No. 1383/2003 of 22 July 2003 concerning customs’ action against goods suspected of
infringing certain intellectual property rights and the measures to be taken against goods found to have infringed
such rights. The European Commission submitted in May 2011 a proposal for a new regulation concerning customs
enforcement of intellectual property rights, aimed at replacing Regulation No. 1383/2003:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0285:FIN:EN:PDF.
549
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
The competent customs body must then inform the rights holder of
its action so as to permit the rights holder to establish whether an
intellectual property right has been infringed under national law.
If the holder or owner of the goods does not abandon the goods for
destruction then the Regulation contemplates that the rights holder
must initiate proceedings to determine whether an intellectual
property right has been infringed under national law.
550
CHAPTER 25
There are also other examples: Goods are made in country A and are shipped
through country B to country C. If they are counterfeit in all three countries, may
the authorities or rights holder act in country B? Or, if they are genuine in country
A and C, but counterfeit in country B, may the same parties act in country B?
On the basis that IP rights are territorial and the goods are not intended for
the market in country B, the goods, while in transit, cannot infringe an IP
right, such a patent right, in country B. This means that, on general principles,
goods that are genuinely in transit should not be subject to customs’ action
in country B. Only if there is reason to believe that the goods might be
diverted to the market in country B would customs’ action be justified.401 Any
other approach may affect the availability of legitimate goods in especially
developing countries.
400 India and the European Union announced on 30 July 2011 that they had entered into a written agreement concerning
the powers of EU customs authorities to stop shipments of generic pharmaceuticals passing through Europe. No
longer is the existence of an EU patent on passing generics sufficient cause to stop shipments.
401 Xavier Seuba Border Measures Concerning Goods Allegedly Infringing Intellectual Property Rights International Centre
for Trade and Sustainable Development, working paper, June 2009.
551
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
The same rules apply to goods that are counterfeit in all three countries:
they are not subject to customs’ action in country B but they may be in the
exporting and importing countries.
5. The ECJ. The position within the European Union is affected by the
complications caused by the common market and regulations that some
perceive as going beyond what was envisaged by TRIPS.
However, the general approach set out above is reflected in the next judgment
quoted. There are other judgments that may give a different impression but
they are distinguishable and, if not, they are not to be commended.403
552
CHAPTER 25
The Court has held that transit, which consists in transporting goods
lawfully manufactured in a Member State to a non-member country
by passing through one or more Member States, does not involve
any marketing of the goods in question and is therefore not liable to
infringe the specific subject -matter of the trade mark.
The Court has further made clear that a trade mark proprietor
cannot oppose the mere entry into the Community, under the
external transit procedure or the customs warehousing procedure,
of original goods bearing that mark which have not already been
put on the market in the Community previously by that proprietor
or with his consent.
As has already been held above, the proprietor of a trade mark can
prohibit the transit through a Member State in which that mark is
protected (the Federal Republic of Germany in the present case) of
553
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
goods bearing the trade mark and placed under the external transit
procedure with another Member State as their destination where
the mark is not so protected (Ireland in the present case), only if
those goods are subject to the act of a third party while they are
placed under the external transit procedure which necessarily entails
their being put on the market in that transit Member State.
6. Landlocked and island countries: The judgment next quoted deals with
the problem by means of interpreting the local legislation, especially the
meaning of the concepts “import” and “export”. It concerns the case of
goods legitimately made in country A for export to country C where the
goods will not be counterfeit. The goods have, however, to pass through
country because the exporting country A is either landlocked or an island
where the goods would have been regarded as counterfeit. The question
was whether the customs authority in country B could impound the goods
on the basis that they had been imported and exported. The court held in
the negative.
The trade mark GAP is registered in 110 countries in the name of one
or more of the respondent. In South Africa the respondent holds
registrations for the mark in classes 3 and 30 while the marks THE
GAP, THE GAP device and GAP device are registered in the name of
the appellant in class 25 in respect of clothing.
554
CHAPTER 25
Reverting then to s 2(1)(f) [of the Act], it may be useful to quote the
salient wording again:
555
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
404 Eli Lilly & Company &Anor v 8pm Chemist Ltd [2008] EWCA Civ 24.
556
CHAPTER 25
557
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
558
CHAPTER 25
[The court then dealt with Montex Holdings v Diesel [2006] ECR
I-10881.]
Third, a mere risk that the goods may be diverted is not sufficient
to justify a conclusion that the goods have been or will be put on
the market.
This case was referred to the ECJ for a preliminary opinion by the English
Court of Appeal and the ECJ heard it and a related matter originating
from Belgium. The ECJ upheld this judgment.
559
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
In the main proceedings, it is not in dispute that the shavers detained in the
port of Antwerp could, where appropriate, be classified as ‘pirated goods’
within the meaning of Regulation No 3295/94 if they were put on sale in
Belgium or in another Member State where Philips holds a copyright and
enjoys the design protection on which it relies, or that the mobile telephones
inspected at London Heathrow Airport would infringe the Community
trade mark relied on by Nokia and would therefore be ‘counterfeit goods’
within the meaning of Regulation No 1383/2003 if they were put on sale
in the European Union. However, the parties to the main proceedings, the
Member States which have submitted observations to the Court and the
European Commission disagree on whether those goods can infringe those
intellectual property rights by reason of the mere fact that they have been
the subject, in the customs territory of the European Union, of a declaration
seeking one of the suspensive procedures referred to in Article 84 of the
Customs Code, namely, in Case C446/09, customs warehousing and, in
Case C495/09, external transit.
560
CHAPTER 25
– those goods may, on the other hand, infringe the right in question
and therefore be classified as ‘counterfeit goods’ or ‘pirated goods’
where it is proven that they are intended to be put on sale in the
European Union, such proof being provided, inter alia, where it turns
out that the goods have been sold to a customer in the European
Union or offered for sale or advertised to consumers in the European
Union, or where it is apparent from documents or correspondence
concerning the goods that their diversion to European Union con-
sumers is envisaged;
– those indications may include, inter alia, the fact that the desti-
nation of the goods is not declared whereas the suspensive pro-
cedure requested requires such a declaration, the lack of precise
or reliable information as to the identity or address of the manu-
facturer or consignor of the goods, a lack of cooperation with
the customs authorities or the discovery of documents or cor-
respondence concerning the goods in question suggesting that
there is liable to be a diversion of those goods to European Union
consumers.
8. Powers to search and seize: To protect the tax base of a country tax or
customs laws often provide certain officials the authority to search for and
seize counterfeit products. The general scheme in Hong Kong is set out in
this judgment.
561
BORDER MEASURES, TRANSIT AND TRANSHIPMENT
officer may seize, remove or detain, not only any article which
appears to him to be an infringing copy of a copyright work as well
as any article which is specifically designed or intended to be used
for making such a copy, but also anything which appears to him to
be or to contain or to be likely to contain evidence of an offence.
An alternative course is that the Court may order that the article be
delivered to the claimant subject to any conditions. That alternative,
however, is not available if the article is either an infringing copy
of a copyright work or is designed or adapted to make copies of a
particular work. Hence, the alternative of delivering the article to
the claimant is effectively only available where it would be evidence
of an offence but not, if it is an infringing article.
The third alternative order which the Court may make is disposal of
the article in a manner and subject to such conditions as it may specify.
Both of the last two alternatives are subject to any conditions which
the Court may impose. Thus, it would be perfectly feasible for a
Court to make an order for the temporary delivery of an article to
the claimant or for the temporary disposal of an article, for example
to the Commissioner of Customs and Excise, subject to conditions as
to their production or delivery up in certain circumstances.
Section 132 provides for orders which the Court may make where
a person has been charged with an offence. The orders which the
Court can make are specifically said to be exercisable whether or not
the person charged is convicted of the offence with which he was
charged. The Section allows orders to be made not only in respect of
infringing copies of copyright works and articles specifically designed
or adapted for making copies of particular copyright works but also
in respect of articles which have been used in connection with an
offence under the Ordinance (again, it would be noted whether or
not a conviction has been secured). The orders which the Court may
make are that the article may be forfeited to the Crown or it may
be delivered up to the person who appears to the Court to be the
owner of the copyright concerned or it may be disposed of in such
other way as the Court may think fit.
562
CHAPTER 25
563
564
DISPOSAL OR DESTRUCTION
OF INFRINGING AND
COUNTERFEIT GOODS
CHAPTER XXVI
A. INTRODUCTION (1)
B. ARTICLE 46 (2-4)
C. ARTICLE 59 (5-10)
565
DISPOSAL OR DESTRUCTION OF INFRINGING AND COUNTERFEIT GOODS
A. INTRODUCTION
The two provisions are interrelated in the sense that Art 59 refers back to
Art 46. This has given rise to interpretation difficulties. A Panel Report,
prepared under the auspices of the WTO, is invaluable in understanding
these provisions and the quotations in this chapter all are taken from that
report.405
On a practical level there are issues concerning the methods used to dispose
of or destroy such goods. These would include environmental issues but
they fall outside the scope of this work.406
B. ARTICLE 46
The judicial authorities shall also have the authority to order that
materials and implements the predominant use of which has been
in the creation of the infringing goods be, without compensation of
any sort, disposed of outside the channels of commerce in such a
manner as to minimize the risks of further infringements.
405 WTO panel report: China – measures affecting the protection and enforcement of intellectual property rights
26 January 2009.
406 WIPO Advisory Committee on Enforcement: David Blakemore A study relating to existing methods of disposal and
destruction of counterfeit goods and pirated goods within the Asia Pacific region December 2-3, 2010.
566
CHAPTER 26
3. The application of Art 46: The Article is a general remedy which applies
to all types of IP infringement, whether patent, designs, trademarks or
copyright. It is as much a remedy as awards of damages or the grant of
interdicts or injunctions. By its very nature an order destruction or disposal
requires a judicial finding of infringement.
The rights holder has to initiate the process. As the Panel said:
567
DISPOSAL OR DESTRUCTION OF INFRINGING AND COUNTERFEIT GOODS
C. ARTICLE 59
6. The scope of Art 59: This Article is a Customs provision and applies to
importation only. This means that it need not be made applicable to goods
seized by Customs where those goods are destined for export or are being
trans-shipped. The panel held as follows:
568
CHAPTER 26
The phrase “shall have the authority” does not require Members to
take any action in the absence of an application or request.
Before the Article comes into play there must have been a positive
determination by the relevant administrative authority that the goods
are counterfeit.
569
DISPOSAL OR DESTRUCTION OF INFRINGING AND COUNTERFEIT GOODS
The responsibility of Customs is to ensure that the manner in which the goods
are disposed of outside the channels of commerce is designed (in terms of
purpose, not result) in such a way that it will comply with the principle. It
may entrust the actual disposal to another body and it is not to be held
responsible for acts of such body in carrying out the disposal otherwise than
in the authorized manner.
Nothing in the evidence suggests that any harm has ever been
caused, or is likely to be caused, to right holders’ reputations due
to donation of infringing goods under the measures at issue. In
fact, the evidence shows that two internationally famous right
570
CHAPTER 26
10. Removal of trademarks: The requirement in Art 46, which also applies
to Art 59, namely that simple removal of a counterfeit trademark unlawfully
affixed is not sufficient, other than in exceptional cases, to permit release
of the goods into the channels of commerce, gave rise to a number of
comments by the Panel.
571
DISPOSAL OR DESTRUCTION OF INFRINGING AND COUNTERFEIT GOODS
572
CHAPTER 26
407 The European Commission announced, in May 2011, that Directive No. 2004/48 would be reviewed in the course of
2012.
408 See also, as far as border measures are concerned, Council Regulation No. 1383/2003 concerning customs action against
goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to
have infringed such rights, Articles 16 and 17 – see: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:19
6:0007:0014:EN:PDF.
A proposal of a new Regulation has been submitted by the European Commission in May 2011, aimed at replacing
Regulation No. 1383/2003.
573
For more information contact WIPO at www.wipo.int
World Intellectual Property Organization (WIPO)
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